Tds on interest other than interest on securities
This query is : Resolved
Anil. bhake
(Querist)
18 April 2012
Dear Experts
My client has taken a loan from financial institution and he has not paid the installments due which includes interest also. Subsequently the FI has sold the pledged securities and recovered the amount.
Now what is legal position inrespect of TDS on Interest. Does he need to pay it and collect from the FI or he can ignore the TDS?
Please reply with relevant provisions.
Thanking You
B ANIL
My client has taken a loan from financial institution and he has not paid the installments due which includes interest also. Subsequently the FI has sold the pledged securities and recovered the amount.
Now what is legal position inrespect of TDS on Interest. Does he need to pay it and collect from the FI or he can ignore the TDS?
Please reply with relevant provisions.
Thanking You
B ANIL
CA PARAS BAFNA
(Expert)
18 April 2012
Interest payment to certain institution do not attract TDS provisions of Section 194A.
You may refer Section 194A(3)(iii), in which banking Company, Co-Op society, LIC & other institutions are included.
.
In case of lenders other than included in the above section, TDS has to be deducted. If you are deducting and depositing tax , please inform the institution in writing and wait for their response.
.
You may refer Section 194A(3)(iii), in which banking Company, Co-Op society, LIC & other institutions are included.
.
In case of lenders other than included in the above section, TDS has to be deducted. If you are deducting and depositing tax , please inform the institution in writing and wait for their response.
.
CA Kishore Tallam
(Expert)
18 April 2012
Agree with expert. Also, While making provision for interest, you have to deduct TDS. Hence, only net amount will be show in ur books towards liability to the Lender.
Assume Rs. 100 is interest and TDS is Rs. 10.
U would have made following entry in books
Interest A/c Dr 100
To Lender A/c 90
To TDS Payable A/c 10
Liability to lender is only Rs. 90. Since he has sold the security and cleared the total interest, the entry will be
Lender A/c Dr 100
To Securities given (assume shares) 100
Then lender account will show a debit balance of Rs. 10 which has to be recovered from the lender and dont forget u have to pay the TDS to the Govt.
Assume Rs. 100 is interest and TDS is Rs. 10.
U would have made following entry in books
Interest A/c Dr 100
To Lender A/c 90
To TDS Payable A/c 10
Liability to lender is only Rs. 90. Since he has sold the security and cleared the total interest, the entry will be
Lender A/c Dr 100
To Securities given (assume shares) 100
Then lender account will show a debit balance of Rs. 10 which has to be recovered from the lender and dont forget u have to pay the TDS to the Govt.
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Anil. bhake
(Querist)
18 April 2012
Thank you very much
Please can quote any section content or case law for reference
Regards
Anil
Please can quote any section content or case law for reference
Regards
Anil
CA Kishore Tallam
(Expert)
18 April 2012
That is general accounting treatment. There will not be any specific section or case law for it.
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