When should individual deduct tds

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

11 February 2014
If an individual is liable to get his accounts audited u/s 44 AB ,then he is required to deduct TDS.

Supposing the individual is carrying on business for which tax audit is required u/s 44AB.He has borrowed a loan amount of 300000 and interest is to be paid .But this loan has not been borrowed for business purpose instead it is borrowed for personal purpose.
That the liability does not appear in the financial statement of the business concern. Then should the individual Deduct TDS on the interest payment or it is not required????

since the liability appears in personal financial statement

thanks& regards

AVTAR SINGH

AVTAR SINGH (Expert)
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11 February 2014 In sections 194A (Interest), 194C (Contracts), 194H (Commission), 194I (Rent) and 194J (Professional fees), there are clear provisions that ordinarily, an individual and HUF are not required to deduct tax at source. However, either a sub-section or a proviso in these sections makes an exception that if the individual or the HUF is required to get his/its accounts audited u/s.44AB for the preceding financial year, on the basis of turnover-criterion, then the said individual/HUF would be required to comply with the provisions of TDS.

Again section 194C and 194J provide that if the individual/HUF is making a payment for personal purpose, then TDS provisions are not applicable. Thus, when a businessman is making a payment to a doctor/lawyer, etc. for personal matters (non-business), no tax needs to be deducted. But for other sections (including 194A for interest payment) TDS would have to be deducted by individual.

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