Dear All
Small information required.
Our employer posed to refund some amount to the financier and the interest came more than one lac.
Amount pertaining to this financial year only.
Our accounts department deducted TDS and paid principal along with interest.
Financier saying no TDS deductable and all interest amount without deducting TDS should be paid to them only.
To the best of my knowledge, we need to deduct TDS from interest amount.
Could you please guide me, which is correct.
Section 194A of the Income Tax Act deals with the provisions relating to deduction of TDS on interest (other than interest on securities).
Any person, other than individual or HUF, who is paying interest (other than interest on securities) to a resident is required to deduct TDS.
Rate of tds is @ 10% and 20 % if PAN not available
TDS is not to be deducted under the following case –
| Amount | Category of Payer |
| An aggregate amount of interest doesn’t exceed INR 40,000 [INR 50,000 in case of a senior citizen] | Bank |
| An aggregate amount of interest doesn’t exceed INR 40,000 [INR 50,000 in case of a senior citizen] | Co-operative Society |
| An aggregate amount of interest doesn’t exceed INR 40,000 [INR 50,000 in case of a senior citizen] | Post office |
| An aggregate amount of interest doesn’t exceed INR 5,000 | In any other case |
List of interest exempted under Section 194A –
Some of the important lists of interest which is exempted under section 194A are –
so TDS deducted is valid
Thank you Mr. Bhaskar
Interest paid to any bank, financial corporation, Life Insurance Corporation Unit Trust of India, any company or a co-operative society engaged in the insurance business.
Here our employer is automobile seller
Another side financiers
Financier released amount by extending finance to a buyer for purchase of commercial vehicle
As purchaser cancelled his buying of commercial vehicle after releasing the payment by financier, the automobile seller posed to refund the finance amount to financier with interest. The interest came more than Rs. 1.00 lac. So, deducted TDS.
So, you are confirming deduction in TDS by the automobile dealer from interest component is CORRECT.
Requesting your confirmation please.
CAclubindia
