TDS ON INTEREST OF CAR LOAN

TDS 3808 views 6 replies

HELLO

ABC LTD HAS OBTAINES CAR LOAN FROM RELIANCE CAPITAL LTD AND   DEPOSITED PDC WITH RELINCE CAPITAL LTD.

WHAT  TDS SHOULD BE DEDUCTED ON INTEREST OF CAR LOAN? WHAT IS PROCEDURE TO BE FOLLOWED BY THE COMPANY?

Replies (6)
Originally posted by :Navin Jain
" HELLO
ABC LTD HAS OBTAINES CAR LOAN FROM RELIANCE CAPITAL LTD AND   DEPOSITED PDC WITH RELINCE CAPITAL LTD.
WHAT  TDS SHOULD BE DEDUCTED ON INTEREST OF CAR LOAN? WHAT IS PROCEDURE TO BE FOLLOWED BY THE COMPANY?
"

No buddy TDS is not to be deducted on Interest paid to banks or financial institution u/s. 194A
 

 

no tds is deductible.

Yes, Financial firms are exempted from TDS

During one of the audit i came a cross with a case.  Concern has taken working capital loan from Reliance Capital and paid installment. In that case concern has deducted TDS and Reliance capital has reimburse the amount after concern gave them Fom 16A. So i suggest please clarify it with reliance capital it self for car loan.

Even the going through the bare act it is written like this for exception

1) Any financial corporation established by or under a Central, State or provincial Act,

2) Such other institution, association or body which the central Govt. may reasons to be recorded in writting.....

so now one can see first exception is not applicable but try to get answer for the second one.

So my advice is that please clarify it with Reliance and share your knowledge.

You have to check with the concerned company, whether they are notified and fall in the category Sec.194A (3). You may verify circular No. F No.275/68/2007-IT (B) notifying institutions u/s.194A (3) (iii) (f). It does not show the name of Reliance Capital Ltd. Hence, according to me, you have to deduct the tax on payment of interest.

 

Payment of Interest to Reliance Capital Limited is liable for tax deduction U/s.194A as it is not covered under the exceptions provided in the said Section.

 

The Act has authorised Central Government to notify from time to time any such institutions for exclusion from the purview of Section 194A. 

 

The Central Government has been issuing notifications in exercise of powers conferred in Section 194A from time to time and as far as I know, Reliance has not been notified as yet.

 

Rgds/Dharmaraju


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