Tds on payment of interest to nbfcs in emi's
This query is : Resolved
Sai charan
(Querist)
04 July 2016
If we pay interest through EMI's to a NBFC ..do we need to make TDS on such payments??
If yes plzz tell me how to do this..and the Provisison applicable
If yes plzz tell me how to do this..and the Provisison applicable
Shubham Gupta
(Expert)
04 July 2016
As per 194A if interest is paid to other than Banking companies than TDS need to be deducted.
Sai charan
(Querist)
02 August 2016
if yes,, then how to deduct TDS
27 July 2025
Here's how TDS works on **interest payments to NBFCs via EMIs**:
---
### 1. **Is TDS applicable?**
* Yes, **TDS is applicable on interest payments made to NBFCs (Non-Banking Financial Companies)**.
* **Section 194A** of the Income Tax Act applies for TDS on interest other than interest on securities.
* Interest paid by you to NBFCs (other than scheduled banks) is **subject to TDS at 10%** if the total interest paid in a financial year exceeds ₹5,000.
---
### 2. **How to deduct TDS on interest in EMIs?**
* EMI (Equated Monthly Installment) usually includes **principal + interest**.
* You need to **calculate the interest component of each EMI separately**.
* Deduct TDS **only on the interest component** of the EMI payment.
* If total interest paid during the year crosses ₹5,000, deduct TDS @10% on interest.
---
### 3. **Practical steps:**
* **Obtain interest certificate or amortization schedule from NBFC** showing interest breakup.
* Deduct TDS @10% on interest part of each EMI.
* Deposit TDS with the government within the due dates.
* File TDS returns (Form 26Q).
* Provide TDS certificate (Form 16A) to the NBFC.
---
### 4. **Important Points:**
* If NBFC provides you a **lower or nil deduction certificate under Section 197**, you should deduct TDS as per that certificate.
* TDS is **not applicable on principal repayment**—only interest component is considered.
* If the interest payment is to a **scheduled bank**, TDS is **not applicable**.
---
If you want, I can help you with a sample calculation or TDS return filing steps for this scenario. Would you like that?
---
### 1. **Is TDS applicable?**
* Yes, **TDS is applicable on interest payments made to NBFCs (Non-Banking Financial Companies)**.
* **Section 194A** of the Income Tax Act applies for TDS on interest other than interest on securities.
* Interest paid by you to NBFCs (other than scheduled banks) is **subject to TDS at 10%** if the total interest paid in a financial year exceeds ₹5,000.
---
### 2. **How to deduct TDS on interest in EMIs?**
* EMI (Equated Monthly Installment) usually includes **principal + interest**.
* You need to **calculate the interest component of each EMI separately**.
* Deduct TDS **only on the interest component** of the EMI payment.
* If total interest paid during the year crosses ₹5,000, deduct TDS @10% on interest.
---
### 3. **Practical steps:**
* **Obtain interest certificate or amortization schedule from NBFC** showing interest breakup.
* Deduct TDS @10% on interest part of each EMI.
* Deposit TDS with the government within the due dates.
* File TDS returns (Form 26Q).
* Provide TDS certificate (Form 16A) to the NBFC.
---
### 4. **Important Points:**
* If NBFC provides you a **lower or nil deduction certificate under Section 197**, you should deduct TDS as per that certificate.
* TDS is **not applicable on principal repayment**—only interest component is considered.
* If the interest payment is to a **scheduled bank**, TDS is **not applicable**.
---
If you want, I can help you with a sample calculation or TDS return filing steps for this scenario. Would you like that?
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