Tds on payment of interest on purchases

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

14 June 2014 TDS need to deduct OR Not for Payment of Rs. 1,77,000 as Interest on Credit Purchases by A HUF Proprietorship Firm?

Supplier says, since it is HUF's Proprietorship Firm, there is no need to deduct TDS. But I doubt, Supplier want to take advantage of Ignorance of Buyer.

Will Buyer comes under fault if he does not deduct TDS and deposit to Department in such case?

Deepti Asawa

Deepti Asawa (Expert)
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14 June 2014 An Individuals or an H.U.F. is not liable to deduct TDS on such payment except where the individual or H.U.F. is carrying on a business/profession where accounts are required to be audited u/s 44AB, in the immediately preceding financial year.

A Individual or HUF is liable to get its accounts audited u/s 44AB if during the relevant financial year its gross sales, turnover or gross receipts exceeds Rs. 1 Crore in case of a business, or Rs. 25 lacs in case of a profession.

So that if HUF's firm liable to get audited u/s 44AB , He should deduct TDS.

Non deduction, late deduction and late deposit of TDS may lead him to face following consequences:

i.Interest on late deduction /deposit of Tax at source.
ii.Dis-allowance of Expenses, on which tax has not been deducted /deposited u/s 40(a)(ia)
iii. Penalty and prosecution.(271C and 276B)

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