Save Rs 499. Go Ad-Free with CAclubindia Pro for 2 Full Years. Subscribe Now!

Tds on interest on loan

780 views 1 replies

vinayak

accountant

255 Points Posted on 16 February 2017

We are Pvt ltd company based in Mumbai. We have 4 directors in company. Company has taken loan from 2 directors on 23rd February, 2016 of Rs.2 lacs each. Since then company neither repaid any amount to director out of it nor company have charged interest on it. Should we charged interest on it in March 2017 and deduct TDS on it? Or should we charge interest and TDS when we repaid the said loans? Can it be possible to charge interest and deduct TDS and pay only interest to directors after deducting applicable tds on it? please suggest the solution.

Replies (1)

Ruchi

1410 Points Posted on 17 February 2017

Tds will be deductible on payment or accrual basis whichever is earlier. If you have not made payment of interest then you can show the entire yearly interest in march and deduct tds then.

Yes, you can chatge interest and make payment of interest only after deducting tds without repaying the loan.

It is always better to show interest on loan at year end rather than wait for repaying the loan and charge interest altogether.