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TDS on interest payable on loan given by individual to proprietorship company

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ADHIP KUMAR MISRA

ACCOUNTS MANAGER

150 Points Posted on 04 August 2022

An individual has given a loan to a proprietorship company in the beginning of the current financial year. Till date the loan has not been repaid . The interest due to him on the loan repayable is more than Rs 5000 . Is TDS deductible and to be booked in accounts now , even though the loan is not to be repaid as of now ? Please clarify .

Replies (5)

Quick Summary

This discussion clarifies the Tax Deducted at Source (TDS) implications when an individual provides a loan to a proprietorship company. TDS is generally deductible on interest exceeding Rs 5,000 during the financial year, regardless of whether the loan principal is repaid. However, the liability for TDS deduction by the individual rests on whether they are subject to tax audit under Section 44AB.

Kiran Hathalia

460 Points Posted on 04 August 2022

TDS liability is attracted to individual only when the person comes under the purview of section 44AB i.e. tax audit. Therefore, in the given case if the individual is liable for tax audit then tds on interest to be deducted.

ADHIP KUMAR MISRA

ACCOUNTS MANAGER

150 Points Posted on 04 August 2022

Thanks for the reply .

Apurv Agrawal

68 Points Posted on 04 August 2022

Yes if interest in loan exceed Rs. 5000 during any time during F.Y. then TDS liability arises on payer of Int. irrespective of fact whether loan has been square up or not..