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5531 Points
Joined December 2013
Yes dear, TDS provisions as per sec-194A will be applicable on interest on loan paid to NBFCs (like Housing Development Finance Corporation Limited, Power Finance Corporation Limited, Rural Electrification Corporation Limited, National Bank of Agricultural and Rural Development, Infrastructure Development Finance Company Limited, etc), as they are not covered in the exceptions as per sec-194A(3) & 197(1D). At the time of payment of EMI, it is not possible to deduct TDS & hence as a general practice it is paid from your own pocket at first & after filing tds return & issue of TDS certificate in Form No.16A to NBFC, they will return the TDS amount. Hence, in the books of accounts you need to debit the NBFC for TDS & on receipt of TDS amount, their accounts should be squared up.
Hope ur doubt is cleared now...