please guide me how much interest we pay on usecured loans and do we deduct tds on same ?
monikaddsi (accounts assistant ) (33 Points)
16 March 2011please guide me how much interest we pay on usecured loans and do we deduct tds on same ?
Devendra
(Chartered Accountant)
(4775 Points)
Replied 16 March 2011
1) The Interest rate depends on the mutual agreement between the Borrower and the Lender.
2) TDS is to be deducted on the Interest payments @ 10% u/s 194A of the Income Tax Act, 1961, if the Interest exceeds Rs. 5000.
Regards,
Devendra Kulkarni
Divya K S
(CA)
(289 Points)
Replied 16 March 2011
Interest rate on unsecured loans will be decided between the parties based on the market rate.
In case the interest is paid by a non-banking company, if the interest amount exceeds Rs. 5000, then TDS must be deducted @ 10% (either individuals or others) u/s 194A
monikaddsi
(accounts assistant )
(33 Points)
Replied 16 March 2011
and one more thing i would like to ask if some one give unsecured loan on the name of director then it will come in tds deduction or not ?
CA Navin Jain
(MANAGER (FINANCE & ACCOUNTS))
(11768 Points)
Replied 16 March 2011
YES TDS WOULD BE DEDUCTED IF UNSECURED LOAN IS IN THE NAME OF DIRECTOR,
O
Vikash Kharvar
(Dy. Manager -F&A)
(469 Points)
Replied 16 March 2011
Athmaram
(Articled Assistant)
(170 Points)
Replied 16 March 2011
If a third party provides loan on the name of a Director then the company can utilise the funds only as an unsecured loan received from the Director.
Hence if any interest paid by the director to the lender the company is not liable to any TDS.
But if the company pays any interst to the director then the provision u/s 194A is applicable.
Thanks & Regards
Ram.
CAclubindia
