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TDS on Interest

27 November 2010

Hi Good Afternoon to All,

We took loan from Bank (secured Loan) and also Individual (Unsecured Loan) for that loan amt we paying interest every month, the interest amt exceeding the Limit amt (Rs.10,000). My question is We have to deduct the or not ?????

Awaiting for your kind repliess...

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21 Replies

Devendra (Chartered Accountant) (4780 Points)
Replied 27 November 2010

Dear Vijaya Kumar

There is no need to deduct TDS on Interest charged on Loan borrowed from Bank which is working under the Banking Regulations Act, 1949. But TDS is to be deducted on interest paid on Unsecured Loan ie the Individual.

Regards,

Devendra P Kulkarni

Varun.T.K (CA Final, CS Executive) (365 Points)
Replied 27 November 2010

TDS to be deducted on the payment of interest to the individual.

(Guest)

section 194A

(3) The provisions of sub-section (1) shall not apply—

(iii) to such income credited or paid to—

(a) any banking company to which the Banking Regulation Act, 1949 (10 of 1949), applies, or any co-operative society engaged in carrying on the business of banking (including a co-operative land mortgage bank

but applies to individual fromwhom u taken unsecured loan

kanagaraj (CHARTERED ACCOUNTANT) (793 Points)
Replied 27 November 2010

Hi Vijay,

If your status is individual and your turnover is <40 lacs(60 lacs for Asst year 2011-12) then you need deduct tax. However, if your TO is > 40 lacs you have to deduct tax for interest payment made to individual.

If your status is other than individual and huf you have to comply tds provisions

regards

Mayur Arora (CA Final) (295 Points)
Replied 27 November 2010

Yes, a perfect answer from Kanagaraj Sir.

Santhosh Poojary (SIEMPRE AHÍ PARA TI) (15607 Points)
Replied 27 November 2010

TDS to be deducted on the payment of interest to the individual.

& in case of loan took from bank ( secured) No TDS will b attracted.

Ranotosh Podder (ca student) (394 Points)
Replied 27 November 2010

Originally posted by : Mayur Arora
	Yes, a perfect answer from Kanagaraj Sir.

Ashish Kushwaha (Article clerk) (24 Points)
Replied 28 November 2010

Section 194A does not apply on individual or HUF. i.e they are not required to deduct TDS.

Secondly, TDS is not required to be deducted where such income is credited or paid to-

- any banking company, co-operative society engaged in the carrying on business of banking ,any finacial corporation, LIC, UTI or any Co. or co-operative society carrying on the business of insurance.

CA SANJAY TALWAR (Job) (222 Points)
Replied 28 November 2010

sir, when i deposit amount in post office in MIS scheme and post office give us monthly interest.....

MIS Rs: 5,00,000/-

Monthly : @ 8% P.A. So, interest 40,000/-

post office interest pay karta hai..... but without deducting tds....

plz reply with proper evidence , post office per tds applicable nahi hai kya ??

sanjay

CA SANJAY TALWAR (Job) (222 Points)
Replied 29 November 2010

are sir koi to answer de do is query ka................

anandgowda (Audit assistant) (34 Points)
Replied 29 November 2010

Dear Vijaya Kumar There is no need to deduct TDS on Interest charged on Loan borrowed from Bank which is working under the Banking Regulations Act, 1949. But TDS is to be deducted on interest paid on Unsecured Loan ie the Individual.

Ranotosh Podder (ca student) (394 Points)
Replied 29 November 2010

@ lucky /sanjay

Sec 194A is not applicable to post office MIS,time deposit,recurring deposit,KVP,NSC.Go through the list of exemptions (more than 10) to sec 194A where tds is not to be deducted from a book which contains details.