if a company has given loan to someone say on 01.04.2013 and no interest has been charged and no tax has been deducted from that loan amount given but later on some services(Contractor Services)say on 1.1.14 has been taken from that person and loan has been set off against that interest payment and TDS has been adjusted. will the liability of TDS will arise on the date of loan or on the date of receiving services?
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Income tax
Replies (1)
As per section 145 of Income tax Act, the asseess has to follow either cash ar accrual method of accounting regularly.
If the company has been regularly following accrual method for Income from other sources, then the interest income on the loan accrues from the date it was given and Tds has to be deducted according to the accrual of interest. Also the rate here would be 10%( and not 1%\2% for contract services)
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