Tds on housing loan interest
This query is : Resolved
25 November 2014
Is TDS is to be deducted where an assesseis under Tax audit and taken a housing loan from private institutions.
25 November 2014
Yes TDS is mandatory on payment of interest to other than banks
.
.
hence u need to disallow the same if TDS not done
.
.
hence u need to disallow the same if TDS not done
25 November 2014
Boss,
Iam not at all taking interest as expense in P&L Account.It is just relates to capital account.But as in audit report whether it is to be mentioned or not.
With Regards,
B.J.N.Bhargav.
Iam not at all taking interest as expense in P&L Account.It is just relates to capital account.But as in audit report whether it is to be mentioned or not.
With Regards,
B.J.N.Bhargav.
27 July 2025
Here’s the breakdown regarding **TDS on housing loan interest** under tax audit:
---
### 1. **Is TDS required on housing loan interest paid to private institutions?**
* **Yes**, TDS under **Section 194A** is required to be deducted if interest is paid to entities **other than banks or specified financial institutions**.
* The threshold limit for deduction is **₹50,000** in a financial year.
### 2. **What if TDS is not deducted?**
* Under **tax audit**, non-deduction of TDS where applicable may lead to disallowance of interest expense under **Section 40(a)(ia)**.
* So, even if the interest is a capital expense (part of cost of asset, not P\&L), the tax auditor may require TDS compliance and mention non-compliance in the audit report.
### 3. **Interest as Capital Account vs. Expense Account**
* Interest paid on housing loan for self-occupied property or investment property is often capitalized and forms part of the cost of the property.
* However, **TDS provisions apply regardless of accounting treatment**.
* For audit and tax compliance, **TDS deduction and deposit is mandatory** if threshold is crossed.
---
### Summary:
| Aspect | Position |
| ----------------------- | --------------------------------------------- |
| Interest paid to banks | No TDS required |
| Interest paid to others | TDS @ 10% if interest exceeds ₹50,000/year |
| Tax audit treatment | Non-deduction of TDS may lead to disallowance |
| Capitalized interest | TDS provisions still apply |
---
### Suggestion:
* Ensure TDS is deducted & deposited timely.
* In audit report, mention compliance or non-compliance.
* If not deducted, be ready for disallowance and related disclosures.
---
If you want, I can help you draft a note for your tax auditor or prepare a checklist for TDS compliance on housing loans. Would you like that?
---
### 1. **Is TDS required on housing loan interest paid to private institutions?**
* **Yes**, TDS under **Section 194A** is required to be deducted if interest is paid to entities **other than banks or specified financial institutions**.
* The threshold limit for deduction is **₹50,000** in a financial year.
### 2. **What if TDS is not deducted?**
* Under **tax audit**, non-deduction of TDS where applicable may lead to disallowance of interest expense under **Section 40(a)(ia)**.
* So, even if the interest is a capital expense (part of cost of asset, not P\&L), the tax auditor may require TDS compliance and mention non-compliance in the audit report.
### 3. **Interest as Capital Account vs. Expense Account**
* Interest paid on housing loan for self-occupied property or investment property is often capitalized and forms part of the cost of the property.
* However, **TDS provisions apply regardless of accounting treatment**.
* For audit and tax compliance, **TDS deduction and deposit is mandatory** if threshold is crossed.
---
### Summary:
| Aspect | Position |
| ----------------------- | --------------------------------------------- |
| Interest paid to banks | No TDS required |
| Interest paid to others | TDS @ 10% if interest exceeds ₹50,000/year |
| Tax audit treatment | Non-deduction of TDS may lead to disallowance |
| Capitalized interest | TDS provisions still apply |
---
### Suggestion:
* Ensure TDS is deducted & deposited timely.
* In audit report, mention compliance or non-compliance.
* If not deducted, be ready for disallowance and related disclosures.
---
If you want, I can help you draft a note for your tax auditor or prepare a checklist for TDS compliance on housing loans. Would you like that?
You need to be the querist or approved CAclub expert to take part in this query .
Click here to login now
Click here to login now
Similar Resolved Queries
Unanswered Queries
- Fixe term employment
- Is any professional CA is here please reply
- GST ITC REVERSE
- Section 50-fixed asset-->building ceases to exist
- EXPORT BILL UNDER LUT FREIGHT CHARGE INCLUED IN INVOICE IT LIABLE TO TAX
- Reprocessing of rectification order AY 2025-26
- Gift Received from nonblood relative
- RCM ISSUE ON RENT AND TRANSPORTATION CHARGES
- Foreign lottery ticket bought online from India: legality, tax and consequences
- Putting a heading on received mail
- Goods sold but invoice not issued
- Tally: Imported bank entries do not show up in manual reconciliation
- Sales of goods of amount Rs97 lakhs to a party
- Confused About My Career After 12th — Cyber Security, AI or Finance? Need Guidance
- STATUTORY AUDIT OF A SMALL PRIVATE COMPANY INCORPORATED ON 28.03.2025
- Guidance Needed: Linking Multiple Form 26QB Payments and Responding to ITD Defaulter Notice
- How to pay remaining amount of TDS after due date?
- Resigning a auditor from the company for misconduct
- RCM @ 5% on Hamali charges, Transport Charges, Unloading charges we take ITC or not
- CALCULATION OF DEFFERED TAX - OP BL IS DTL & CURRET IT DTA
Trending Online Classes
-
DT & Audit (Exam Oriented Fastrack Batch) - For May 26 Exams and onwards Full English
CA Bhanwar Borana & CA Shubham Keswani
Subscribe to Pro
Join an elite circle of professionals
CAclubindia
