Tds on interest
This query is : Resolved
Querist : Anonymous
Querist :
Anonymous
(Querist)
28 June 2012
SIR
My clint(INDL) is maintaning separte books of accounts i.e one is Business set which is prorprietory busuness audited u/s 44 AB of IT act & other set which is persoanl Books of accounts having other souces income i.e Dividend, Interest, FD interest etc. during a Y 12-13 in personal set , interest paid in excess of Rs.5000/- whether TDS is to deducted or not ?
My clint(INDL) is maintaning separte books of accounts i.e one is Business set which is prorprietory busuness audited u/s 44 AB of IT act & other set which is persoanl Books of accounts having other souces income i.e Dividend, Interest, FD interest etc. during a Y 12-13 in personal set , interest paid in excess of Rs.5000/- whether TDS is to deducted or not ?
28 June 2012
Yes, TDS is to be deducted if both the income pertain to a single assessee.
Querist : Anonymous
Querist :
Anonymous
(Querist)
04 July 2012
Thank you for reply. But some confusion . As per guideline issued by CA institute & as per opnion of shri Palkhiwala, if two separate set of books of accounts are maintaned one for Business set & other set is personal set . If business set is requred to be audit u/s 44 AB the it is not necessary to audit personal set of accounts althou it combines all income . If personal set are not requred to be audited the How TDs is required to be decited in personal set comprising only Dividend income Interest on FDr & interest paid . If you have case lawa or other materisl plase secify.
Jayesh shah CA
Jayesh shah CA
Querist : Anonymous
Querist :
Anonymous
(Querist)
05 July 2012
If personal sets of Books of accounts are not requred to audited u/s 44 AB ( only business sets are required to be audited u/s 44 AB being proprietory concern) then How can a liability arises to deducted TDS in personal Set Books of A/c
Jayesh Shah
Jayesh Shah
27 July 2025
Great question! Here’s a detailed explanation about TDS on interest when an individual maintains two sets of books — one for business and another for personal income:
---
### Situation Recap:
* **Assessee (Individual)** maintains:
* Business books (proprietorship) audited under section 44AB.
* Separate personal books with income from dividends, interest on FDs, etc.
* Interest **paid** exceeds Rs. 5,000 in the personal books.
* Query: Is TDS applicable on interest paid in the personal set?
---
### Relevant Provisions:
* **Section 194A** of the Income Tax Act requires TDS on interest payments by individuals/HUFs if interest payment exceeds Rs. 5,000 in a financial year.
* This applies to **interest other than interest on securities** — typically interest on bank FDs, loans given by individuals, etc.
---
### Key Points:
1. **Single Assessee, Combined Income:**
* Legally, an individual is a **single assessee**, even if separate books are maintained.
* TDS liability arises based on payments made by the assessee **in aggregate**.
* So, whether interest is paid from business or personal books, if the interest payment exceeds Rs. 5,000 to a single payee, TDS must be deducted.
2. **Audit under Section 44AB:**
* Audit requirement (44AB) applies only to the business set, not personal set.
* TDS deduction is independent of audit applicability.
* TDS deduction responsibility arises as per income tax provisions and is **not linked to audit applicability**.
3. **TDS Deduction on Personal Interest Payments:**
* If the interest is paid by the individual in personal capacity (personal set), and exceeds Rs. 5,000 per year to a single payee, TDS must be deducted.
* Non-deduction or late deduction attracts interest and penalties.
4. **Case Law or Circular:**
* No direct case law needed here — the law is clear on combined income of an individual.
* ICAI guidance and CBDT circulars have clarified TDS is to be deducted on interest payments exceeding threshold irrespective of separate accounting.
---
### Summary:
| Aspect | Explanation |
| --------------------------- | -------------------------------------------------------- |
| Separate books maintained | No impact on TDS liability — assessee is one entity |
| Audit applicability | TDS deduction not linked to audit requirement |
| Interest payment > Rs.5,000 | TDS under section 194A applicable even in personal books |
| Non-deduction | Penalties and disallowance may apply |
---
**Bottom line:**
If your client pays interest exceeding Rs. 5,000 from personal books to any individual/entity, **TDS under section 194A must be deducted**, irrespective of audit status.
---
If you want, I can help draft a simple explanation or official references for your client or auditors!
---
### Situation Recap:
* **Assessee (Individual)** maintains:
* Business books (proprietorship) audited under section 44AB.
* Separate personal books with income from dividends, interest on FDs, etc.
* Interest **paid** exceeds Rs. 5,000 in the personal books.
* Query: Is TDS applicable on interest paid in the personal set?
---
### Relevant Provisions:
* **Section 194A** of the Income Tax Act requires TDS on interest payments by individuals/HUFs if interest payment exceeds Rs. 5,000 in a financial year.
* This applies to **interest other than interest on securities** — typically interest on bank FDs, loans given by individuals, etc.
---
### Key Points:
1. **Single Assessee, Combined Income:**
* Legally, an individual is a **single assessee**, even if separate books are maintained.
* TDS liability arises based on payments made by the assessee **in aggregate**.
* So, whether interest is paid from business or personal books, if the interest payment exceeds Rs. 5,000 to a single payee, TDS must be deducted.
2. **Audit under Section 44AB:**
* Audit requirement (44AB) applies only to the business set, not personal set.
* TDS deduction is independent of audit applicability.
* TDS deduction responsibility arises as per income tax provisions and is **not linked to audit applicability**.
3. **TDS Deduction on Personal Interest Payments:**
* If the interest is paid by the individual in personal capacity (personal set), and exceeds Rs. 5,000 per year to a single payee, TDS must be deducted.
* Non-deduction or late deduction attracts interest and penalties.
4. **Case Law or Circular:**
* No direct case law needed here — the law is clear on combined income of an individual.
* ICAI guidance and CBDT circulars have clarified TDS is to be deducted on interest payments exceeding threshold irrespective of separate accounting.
---
### Summary:
| Aspect | Explanation |
| --------------------------- | -------------------------------------------------------- |
| Separate books maintained | No impact on TDS liability — assessee is one entity |
| Audit applicability | TDS deduction not linked to audit requirement |
| Interest payment > Rs.5,000 | TDS under section 194A applicable even in personal books |
| Non-deduction | Penalties and disallowance may apply |
---
**Bottom line:**
If your client pays interest exceeding Rs. 5,000 from personal books to any individual/entity, **TDS under section 194A must be deducted**, irrespective of audit status.
---
If you want, I can help draft a simple explanation or official references for your client or auditors!
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