14 September 2008
My client is liable to audit u/s 44AB, he has taken a vehicle on finance from Ashok Leyland. Alongwith the principal amoun he is paying interest of more than Rs. 10000/- to the co.Is he required to deduct TDS on the amount paid as interest.
14 September 2008
Pl. visit http://www.taxworry.com/2007/12/should-you-deduct-tax-at-source-on.html which says
"Interest paid on loan is covered u/s 194A . Subsection 3 of section 194A provides cases where the provision of TDS u/s 194A do not apply. Clause (iii) of sub section 194(3) provides that tax is not required to be deducted in case interest is paid or credited to banking or financial institutions"
Please check up whether Ashok Leyland Finance fits into the definition of financial institution as per Sec 194-A; if it fits, no need for affecting TDS.
You may find full text of the Section from the above site. It appears to me that Ashok Leyland Finance doesn't fit into the definition as per Section. Anyway, check up with the Company
14 September 2008
The earstwhile Ashok Leyland Finance Limited was merged with Indus Ind Bank Limited from 2003 or 2004. Now its a Division of the Bank for financing vehicles. Therefore, in my opinion no TDS to be deducted at source from such payment.
CAclubindia
