TDS on Interest paid to debtors

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This query is : Resolved

Chandan Kumar Mittal (Querist)

10 July 2009 whether interest payable for advances received from debtor who is a PSU being a Govt.Co. is liable to deduction of Tax at Source.If not,whether the said payment is allowable as business expenditure.

NITIN

NITIN (Expert)

10 July 2009 Any amount in the form of interest except to gover. or any its undertaling etc trs r require to be deducted and therefore in give case no tds is require to be deducted

CA Bosu babu

CA Bosu babu (Expert)

10 July 2009 No nitin, even govt payee also covered.....

as per 194A payee is any resident of india. so PSU also covers....so you hav to deduct TDS

taxindiaconnect

taxindiaconnect (Expert)

10 July 2009 I do not agree with both the above opinions expressed by the experts. Section 194A(3)(iii)(f) provides as in this regards that the Interest credited or paid to such institutions association or body corporate which the central govt. may for the reason to be recorded in writing notify be exempt from TDS. The Notified institution for this purpose are notified by various notifications issued by CBDT. For the list of such institution please see the page no 3.202 of taxmann master Guide to Income tax 18th Addition / 2008.

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