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194a for A y 2024-25

Tax queries 779 views 7 replies

The assesse is engaged in money lending activities and during the period total interest receipt is of 1.9cr and preceding year 1.8cr

The assesee have expenses in nature of int paid to parites from unsecured loan is taken for extending further loan ,,, whether tds 194a is applicable,,    

Is 44ab clause applicable or not 

Replies (7)
Quick Summary
If turnover exceeds limits, tax audit under Section 44AB applies. Once audit applies, TDS under Section 194A is required on interest payments above threshold. Section 44AB still exists with revised limits.

Since your previous year's turnover (₹1.8 Cr) exceeded the ₹1 Cr limit, you must deduct TDS under Section 194A on interest payments. A Tax Audit under Section 44AB is mandatory if your cash transactions exceed 5% of your total turnover; otherwise, you are exempt.

  1. Section 44AB is applicable because turnover exceeds ₹1 crore (subject to digital transaction condition).

  2. Since tax audit was applicable in the preceding year, TDS under Section 194A is applicable on interest paid on unsecured loans.

  3. TDS must be deducted if payment exceeds prescribed threshold.

44ab clause is removed after amended in finance act 2020 ,,      only turnover of 1 cr and 50lkh is condition 

Section 44AB is applicable if:

  • Turnover exceeds ₹1 crore (normal rule), OR

  • Turnover exceeds ₹10 crore where cash receipts/payments exceed 5%, OR

  • For professionals, if gross receipts exceed ₹50 lakhs.

If cash transactions are within 5%, audit is required only if turnover exceeds ₹10 crore.

Section 44AB is not removed.

Only the audit threshold limit was enhanced.

Applicability depends on turnover and percentage of cash transactions.

Sir we are discussing applicability of 194a whether for 2024-25 it is linked to clausea and b of sec 44ab

The misconception that Section 44AB has been “removed” appears to stem from a misunderstanding of the amendment. An increase in the monetary threshold does not amount to repeal of the provision. The charging mechanism and compliance requirement under Section 44AB continue to operate wherever the prescribed turnover limits are exceeded.

Therefore, it would be legally incorrect to state that Section 44AB stands withdrawn. The provision subsists, albeit with modified applicability thresholds.

The section on it website clearly indicates that prior to 2020 the  44ab  was linked and after that not linked, only turnover specificed at 1 cr and 50 lkh 


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