Tds on interest on overdue purchase bills to creditor

Dear Experts,

Please reply me whether Interest on Overdue purchase bills paid to our creditors is liable to TDS u/s 194A???

Replies (5)

first of all 

Purchase is out of scope of TDS, unless its booked under indirect expenses of P/L account 

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if debit note is issued by the seller for interest ( if any), then accounting method of booking the debit note would ascertain the applicability of TDS applicable or not

first of all 

Purchase is out of scope of TDS, unless its booked under indirect expenses of P/L account 

-------------

if debit note is issued by the seller for interest ( if any), then accounting method of booking the debit note would ascertain the applicability of TDS applicable or not

We already deduct the TDS for our client yesterday in consult with our statutory auditor.I just want to assure myself whether it is right practice or not..

So many case laws & judgements available where it was decided that there is no applicability of TDS 194A.

if the interest amount exceeds Rs 5000 then auditor's advise is as per existing laws 

1.IN THE ITAT HYDERABAD BENCH ‘A’

Sri Venkatesh Paper Agencies (Hyd.) (P.) Ltd. V/s. Deputy Commissioner of Income-tax, Circle-3(1), Hyderabad

2.The Income Tax Officer, Ward-2, Nagapattinam Versus Mr. T. Rajendran - 2016 (1) TMI 635 - ITAT CHENNAI - ITAT CHENNAI 

These case laws gave their judgement which clarified nonapplicability of TDS u/s 194A on Interest on Overdue Purchase bills.

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