Tds on interest paid to nbfc

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This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

24 July 2013 It is clear that assessee has to deduct TDS from Car loan interest paid to NBFC. But sometimes, a car loan is in the name of say Director of a company or partner of a firm and all the payments - downpayments, intstallments (EMI) etc paid by company/firm. The Car and Car loan is also appearing in the books of Company/firm. Car is used for the business purpose by Company/ Firm. Only to avoid higher RTO taxes, the car is bought in the name of Director/partner.

My query is whether TDS should be deducted by the Company/firm on interest payments to NBFCs like Kotak Mahindra Prime or Tata Capital etc if the loan itself is not in the company name?

CA PARAS BAFNA

CA PARAS BAFNA (Expert)

24 July 2013 The matter of TDS arises mainly only when such payments are made by the business entity. As the car has been used in the business and NBFC is accepting cheques from the firm/company, and further the firm/company is liable to deduct TDS, do the finance company object ?
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Why company is making interest payments for the cars ? Naturally it is for the purpose of the business only.
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so, in my view the substance over form prevail in such cases. When the company can claim depreciation , interest etc, why it can not deduct TDS ?
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Message likes : 1 times

Ganeshbabu K

Ganeshbabu K (Expert)

24 July 2013 1)TDS is applicable on interest paid to NBFC.

2)generally it will not get deducted at the time of EMI payment..

3)you need to pay TDS from your pocket and then after filing TDS return if you provide FORM16A for TDS paid on interest paid to NBFC they will pay you back the TDS money..this is what generally goes in case of NBFC tds settlement

4)just debit the NBFC account for the tds paid and as and when you collected money from them credit their account

Thanks & regards
Ganesh babu k

Message likes : 5 times

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