Live Course on Drafting of Appeal and Reply of Penalty Notice by CA Sachin Sinha. Register Now!!

clarification

SRINIVASULU SURE (CA in Practise) (80 Points)

15 June 2009

Assessee paying interest on car loan to shri ram transport company and state bank of india as finance charges. whether the assesee is liable to deduct TDS on such finance charges?

Reply
Follow
Share

8 Replies

CA. Gurdeep Singh Chawla (C A) (7080 Points)
Replied 15 June 2009


		"

TDS is not applicable on bank charges

PRAVEEN KUMAR (MBA (Finance) B.Com.(P)) (3443 Points)
Replied 15 June 2009

Yes, Mr Chawala is right

NO TDS on Bank Charges

Aditya Maheshwari (CA in Practice) (35867 Points)
Replied 15 June 2009

Yes TDS is not applicable on bank charges and other charges including interest paid to bank.

kumar (student) (138 Points)
Replied 16 June 2009

If the assessee is paying int on car loan to the bank tds is not applicable.

even for the int paid to transport compnay tds is not applicable (applicable only if assessee is covered U/s 44AB)

CA. Rashi Goyal (Chartered Accountant) (512 Points)
Replied 18 June 2009

Interest and finanace charges paid to bank is is exempt from TDS provisions. For interest paid to transport company TDS applicability depend on the status of assesse. In case of Individual & HUF the exemption is available if they are not covered under 44AB, else the TDS will be applicable.

Ajay Chaudhary (CA) (63 Points)
Replied 18 June 2009

If the assessee has paid "interest" (i.e. charges for using funds) then it is liable for TDS. Using alternative word for interest such as "Finance Charges" will not change the position. However if it is paid to SBI then, No TDS required. if it is paid to the Sri ram transport company as you have written, deduct TDS.

Nowadays, these finance companies, particularly private Financers are using the word "Finance Charges" in their statements, it is nothing but chrages for using their funds for a particular period. it has the nature of interest.