TDS on Commercial Vehicle Loan used for business by Proprietor

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This discussion clarifies whether TDS needs to be deducted on the interest paid for a commercial vehicle loan taken by a proprietor for business purposes from Cholamandalam Investment & Finance Co. Ltd. TDS under Section 194A is generally applicable unless specific exemptions apply, such as interest paid to banking companies or certain financial corporations. As Cholamandalam is an NBFC, TDS deduction is not exempted in this case, provided the proprietor's turnover exceeds the specified limits.

Francis George

Francis George (Querist)

16 August 2023 Hello, Could anyone please help me on the below query

A proprietor took a loan for Commercial Vehicle Loan for business use from Cholamandalam Investment & Finance Co. Ltd. Yearly the interest happens to be around Rs.74912/-.

Should we deduct TDS on the Interest paid to Cholamandalam?

Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)

16 August 2023 Yes, TDS u/s. 194A is applicable.
However, only if, an individual or a HUF, whose total sales, gross receipts or turnover from the business or profession carried on by him/it exceeds Rs. 1 crore in case of business and Rs. 50 lakhs in case of a profession1 during the financial year immediately preceding the financial year in which the aforesaid amount is credited or paid, shall be liable to deduct tax under section 194A.

RAJA P M

RAJA P M (Expert)

16 August 2023 TDS not applicable in this financial institution interest... Please confirm

Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)

16 August 2023 The instances where no tax is to be deducted u/s. 194A IT act. are as follows:
 Interest paid to any banking company to which the Banking Regulation Act, 1949, applies, or any co-operative society engaged in carrying on the business of banking (including a co-operative land mortgage bank).
 Interest paid to any financial corporation established by or under a Central, State or Provincial Act.
 Interest paid to the Life Insurance Corporation of India established under the Life Insurance Corporation Act, 1956.
 Interest paid to the Unit Trust of India established under the Unit Trust of India Act, 1963.
 Interest paid to any company or co-operative society carrying on the business of insurance.
 Interest paid to any other institution, association or body or class of institutions, associations or bodies which the Central Government may notify.
 Interest paid by a co-operative society (other than a co-operative bank) to a member thereof or to such income credited or paid by a co-operative society to any other co-operative society.

Thus TDS deduction over NBFC is not exempted.

Francis George

Francis George (Querist)

17 August 2023 Thank You Very Much Sir

Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)

17 August 2023 You are welcome.

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