whether tds applies on the following:
1.) repayment of loan from director
2.) LC discounting charges
If yes, under which section & please also refer provision or decided case
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Applicability of tds
Replies (3)
NO
Regarding interest on repayment of loan to directors - TDS is applicable since it is not specifically exempted u/s 194A
Regarding Discounting on LC - The supplier in whose favour LC was issued discounted it with the bank to receive payment. This discount is actually in the nature of Interest. In this case TDS is not applicable since payment is made to a banking company. Such payments are specifically exempted u/s 194A
Discount Charges are paid to banks. As per section 194A(3) provisions of TDS does not apply to payment that are made to banks. Therefore provisions of TDS doesn't apply on LC discounting charges.
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