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Tds on loans

Ramesh (Audit Manager) (111 Points)

16 July 2013

One of our client has taken loan from bank, and interest being paid monthly , now my doubt is whther our clint need to deduct tds on interest or not.

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11 Replies

C.A. Sandeep Wawhal (Chartered Accountant PGDFM BCom.) (1823 Points)
Replied 16 July 2013

No it is not applicable in such case.

PRAVEEN KUMAR (MBA (Finance) B.Com.(P)) (3443 Points)
Replied 16 July 2013

You are right :)

Originally posted by : SANDEEP R. WAWHAL
	No it is not applicable in such case.

nikhil (CA) (77 Points)
Replied 16 July 2013

TDS for only interest paid to NBFC needs to be deducted, unless specifically mentioned not to deduct the same

sssvkSridharan R. (CA (Final) Salem. Tamilnadu. sssvksridhar@yahoo.co.in) (218 Points)
Replied 16 July 2013

194A. Interest other than “Interest on securities”.

(1) Any person, not being an individual or a Hindu undivided family, who is responsible for paying to a resident any income by way of interest other than income by way of interest on securities, shall, at the time of credit of such income to the account of the payee or at the time of payment thereof in cash or by issue of a cheque or draft or by any other mode, whichever is earlier, deduct income-tax thereon at the rates in force :

Provided that an individual or a Hindu undivided family, whose total sales, gross receipts or turnover from the business or profession carried on by him exceed the monetary limits specified under clause (a) or clause (b) of section 44AB during the financial year immediately preceding the financial year in which such interest is credited or paid, shall be liable to deduct income-tax under this section.

Explanation.—For the purposes of this section, where any income by way of interest as aforesaid is credited to any account, whether called “Interest payable account” or “Suspense account” or by any other name, in the books of account of the person liable to pay such income, such crediting shall be deemed to be credit of such income to the account of the payee and the provisions of this section shall apply accordingly.

(2) [Omitted by the Finance Act, 1992, w.e.f. 1-6-1992.]

(3) The provisions of sub-section (1) shall not apply—

(i) … … ….

(ii) … … …

(iii) to such income credited or paid to—

(a) any banking company to which the Banking Regulation Act, 1949 (10 of 1949), applies, or any co-operative society engaged in carrying on the business of banking (including a co-operative land mortgage bank), or

(b) any financial corporation established by or under a Central, State or Provincial Act, or

(d) the Unit Trust of India established under the Unit Trust of India Act, 1963 (52 of 1963), or

(e) any company or co-operative society carrying on the business of insurance, or

(f) such other institution, association or body or class of institutions, associations or bodies which the Central Government may, for reasons to be recorded in writing, notify in this behalf in the Official Gazette;

(iv) … … …