Tds on interest paid on secured loans to bank & nbfc

Dear Vipul

1. As per Sec. 194A(3)(iii), interest paid on a loan availed from the bank is not subject to TDS without any limit.
2. However, interest paid to NBFC is subject to TDS u/s 194A, provided interest paid or credited to the payee NBFC exceeds Rs.5000.

Regards

Ajay

sir we are paying the amount through emi everymonth on our secured loans from nbfc and at the end of finacial year we had made a journal entry for interest debit during the year for reconcilation of principal balance outstanding, so on that amount tds is applicable or not

Dear Vipul

You may please conitnue making the journal entries to account for the interest component of EMI.

I am sharing an article with regards to this - https://www.simplifiedlaws.com/tds-on-interest-paid-to-nbfc-with-emi/

As per this post, you keep making TDS remittance in respect of interest component on EMI on a monthly basis out of your pocket and also file quarterly TDS returns regularly and issue TDS certiifcates for each quarter. Then, while issuing the TDS certificate, write to your lender NBFC to make the refund of the TDS amount.

You may also talk to the lender NBFC directly for any other more practical solution as many other borrowers may be facing the same problem.

Regards

Ajay