Does Interest Paid to Creditors attract TDS.

2015 views 7 replies

Guest

Friends i have two question.

1.A Company Pays interest to creditors for belated payment. The interest paid is more than 10,000. Does the company need to deduct TDS?

2. A company give Letter of credit to a creditor for payment and the creditor discounts it with his bank. It is normal custom that the creditor will claim such discounting charges from company. Now such payments is interest? If yes then whether TDS apllicable?

Replies (7)

CA Pramod Jain

manager finance

1577 Points Joined April 2009

i have answer for your 1st question it will attract tds

Amir

Learner

4016 Points Joined December 2009

Dear Sathyanarayan,

1) TDS will be attracted & threshold limit is 5,000

2) TDS will not be attracted in this case since it is a kind of reimbursement of expenses incurred by Creitor.

Guest

Originally posted by : Amir
	Dear Sathyanarayan, 1) TDS will be attracted & threshold limit is 5,000 2) TDS will not be attracted in this case since it is a kind of reimbursement of expenses incurred by Creitor.

DEAR AMIR, FOR POINT 2 WHAT KIND OF EXPENDITURE IT IS TO COMPANY? I AM THINKING IT AS INTEREST FOR CREDIT PERIOD. PLEASE GIVE YOUR SUGGESSTION.

Amir

Learner

4016 Points Joined December 2009

Dear Sathyanarayan,

Brother these are Bank Charges/Discounting Charges & not "Interest".

Guest

Dear Amir

Thank for reply.

In case of LC bank is charging Usance Charges. Actually it is interest charged by party seperately mentioning as interest in seperate invoice. Whether such payment attract TDS.