Tds on interest on borrowed capital?

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Tax (Querist)
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29 March 2017 Facts of the case -

Assessee borrowed capital from his mother for the purposes of this business..

Assessee wants to pay interest on on that capital

Queries -

1. Can the assessee pay Interest on Capital? If yes, at what percentage?

2. Does he need to deduct TDS for this Interest on Capital? If yes, at what percentage?

3. What is the last date to deduct & deposit such TDS?

4. Does the assesee require TAN number for such TDS deduction?

Please help me out.

Thanks in advance.

CA Shubhanshu Jain

CA Shubhanshu Jain (Expert)
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29 March 2017 1. Assessee can pay whatever rate he likes but its better if rate is nearby market rate of interest

2. If interest paid during the year is more than 10000 then TDS is to be deducted @ 10% (Sec. 194A)

3. As such there is no last date for deduction of TDS, but TDS is to be deducted when expense accrue or payment is made whichever is earlier (in your case at the time of making payment) and after deduction TDS is to be paid on 7th of month following month of deduction like if TDS is deducted in month of June last date of payment is 7th July.

4. yes TAN tumber is required for deducting TDS.

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Tax (Querist)
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29 March 2017 Thanks a lot Sir!

But TDS is deductible under section 194 A only if his accounts were tax audited u/s. 44AB in preceeding year, right?

CA Shubhanshu Jain

CA Shubhanshu Jain (Expert)
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30 March 2017 Concept of tax audit is applicable in case of individual/HUF not in case of firm

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