Tds on car loan emi??

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SANJAY (Querist)
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11 May 2012 Dear Experts,

If a company is paying its Car loan EMI to financing company (other then Banks), whether TDS is mandatory to be deducted on interest part of EMI paid. Or Not??

As per my view any payment made to banks for interest then TDS is not applicable. So in this case also we are not liable to deduct TDS??

Please correct me if i m wrong??

Thanks in advance..

CA Divyesh Sodha

CA Divyesh Sodha (Expert)
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11 May 2012 Interest payment to Finance Companies is liable for tds.

CA Divyesh Sodha

CA Divyesh Sodha (Expert)
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11 May 2012 Interest payment to Finance Companies is liable for tds.

SANJAY

SANJAY (Querist)
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11 May 2012 Can you please send me the reference, wher it is mention in the law..? Please its require to produce to the seniors..

Thanks in advance..

Jagdish Bhalia

Jagdish Bhalia (Expert)
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12 May 2012 Hi, Interest paid on loan is covered u/s 194A . Subsection 3 of section 194A provides cases where the provision of TDS u/s 194A do not apply. Clause (iii) of sub section 194(3) provides that tax is not required to be deducted in case interest is paid or credited to banking or financial institutions.The said provision u/s 194A(3)(ii) is as under : (3) The provisions of sub-section (1) shall not apply (iii) to such income credited or paid to- (a) any banking company to which the Banking Regulation Act, 1949 (10 of 1949), applies, or any co-operative society engaged in carrying on the business of banking (including a co-operative land mortgage bank), or (b) any financial corporation established by or under a Central, State or Provincial Act, or (c) the Life Insurance Corporation of India established under the Life Insurance Corporation Act, 1956 (31 of 1956), or (d) the Unit Trust of India established under the Unit Trust of India Act, 1963 (52 of 1963), or (e) any company or co-operative society carrying on the business of insurance, or (f) such other institution, association or body or class of institutions, associations or bodies which the Central Government may, for reasons to be recorded in writing, notify in this behalf in the Official Gazette; Accordingly, you are not required to do TDS on interest payment to banks on auto loan.

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CA Bhuvnesh mittal

CA Bhuvnesh mittal (Expert)
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13 May 2012 yes bhalia ji is right

SANJAY

SANJAY (Querist)
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14 May 2012 But Mr. Bhalia, i m asking for the companies other then Banking company, who is providing car loan to the company, In this case what we should do?

Example: Suppose Tata Capital or Future Capital (P) Ltd. is providing Car loan to the other company then what should i do??

Please reply soon??

Jagdish Bhalia

Jagdish Bhalia (Expert)
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14 May 2012 you have to deduct TDS u/s 194A

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