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Tds on lic loan

CHIRAG DEEPAK GANATRA (CA FINAL) (1054 Points)

24 September 2013

Im Doing Audit of Proprietory Concern.

in Which Proprietor Has taken loan from LIC of India Against Insurance Policy

so Shall TDS to be Deduct on Interest on LOAN ??

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9 Replies

CA Pramod Jain (manager finance) (1577 Points)
Replied 24 September 2013

TDS not applicable on interest payment to LIC

CHIRAG DEEPAK GANATRA (CA FINAL) (1054 Points)
Replied 24 September 2013

why? any reference???????????????????????????????

Ritzz (CA Final - Article ) (365 Points)
Replied 24 September 2013

Dear Chirag

Kindly refer to section 194A which clearly says that no TDS has to be deducted on Interest paid/payable to banks, Financial corporation, LIC, Other insurance companies, UTI and other notified institutions.

I hope this resolves your query.

regards

Ashwani Narnoli (.) (1843 Points)
Replied 24 September 2013

agree with experts opinion, tds should not be deducted

CA Akshat (article) (422 Points)
Replied 24 September 2013

No tax shall be deducted in the following cases –

Where the payee is –

Any banking company/ co-operative land mortgage bank.
Any financial corporation
LIC / UTI
Any company or society carrying on insurance business
Any other notified institution

Where the firm pays interest to its members
Where a co-operative society pays interest to its members
Where a co-operative society pays interest to another society
Interest on notified deposit schemes of Post office, some notified deposits schemes are –

PO RT A/c, PO time deposit A/c PO MIS, KVP, JVP, NSC

Note: The Senior Citizen Scheme is not notified under this list. Hence TDS shall be necessary. Where a bank or a co-operative bank pays or credits interest on deposits other than time deposits.View Form 26AS TDS Deduction Status Online

Note:

If a bank / co-operative bank pay interest on time- deposit, TDS shall be necessary. Here tie deposit means deposit (other than recurring deposits) repayable on expiry of fixed periods.
Where a primary agricultural credit society or a primary credit society or a co-operative land mortgage bank or a co-operative land development bank pays or credits interest on deposits.
Where interest is paid or credited by the central Govt. under different provisions of direct taxes.
Where interest is paid on compensation amount awarded by the Motor accidents claims tribunal provided the amount of interest during a financial year does not exceed Rs. 50,000/-
Interest payable on Zero coupon Bonds
Interest payable by a offshore Banking unit (OBU) to NOR on deposits or Borrowings
In all other cases, if the total amount of interest payable during financial year does not exceed the prescribed limit, as discussed below:

If the payer is (i) a bank, (ii) a co-operative bank, (iii) post office — 10,000/-

If the payer is any other person – 5,000/-

Note: If the payer is bank / co-operative bank / housing finance company, the exemption limit of Rs. 10000 or 50000 shall be applied separately to each branch of payer.

Adjustment of excess / deficiency:

The payer can increase or reduce of amount of TDS so as to adjust previous excess / short deduction during the same year.

1 Like

Sandeep Joshi (ACCOUNTANT) (66 Points)
Replied 24 September 2013

Yes, i agry with mr. Aksat but i think u have some mistake in this. Bank - 5000 & other person - 10000 limit for tds .

S.Rajesh kumar (Working with practicing CA) (28 Points)
Replied 24 September 2013

For it bank 10000 N other 5000

CA Pramod Jain (manager finance) (1577 Points)
Replied 25 September 2013

Read sec 194A as commented above before writing 10K n 5K. Question was whether tds is applicable on interest payment to LIC and it is not applicable.

Any banking company/ co-operative land mortgage bank. Any financial corporation LIC / UTI Any company or society carrying on insurance business Any other notified institution

Read more at: /forum/-265982.asp