LIVE GST Certification Course by CA Arun Chhajer begins 27th April. Register Now!!

Tds u/s 194a

Manoj chopra (article) (128 Points)

05 March 2013

Is interest paid on late payment of purchase bill liable for deduction of TDS u/s 194A? please tell

Reply
Follow
Share

7 Replies

Deepak Gupta (CA Student) (15922 Points)
Replied 05 March 2013

Originally posted by : Manoj chopra
	Is interest paid on late payment of purchase bill liable for deduction of TDS u/s 194A? please tell

Interest for delayed payment towards cost of purchase is compensatory and not related to any deposit /debt /loan and hence outside the ambit of section 194 A. Where payment had no nexus with deposit, loan or borrowings, it is not interest within the meaning of section 2(28A)
.
ITO v. Parag Mahasukhlal Shah [2011] 46 SOT 302 Ahd

CA Shruti Gupta (CMA FINAL CS Final) (1434 Points)
Replied 05 March 2013

NO TDS ON ABOVE INTEREST IS LIABLE TO PAY TAX....

Manoj chopra (article) (128 Points)
Replied 05 March 2013

As per Section 2(28A) " interest" means interest payable in any manner in respect of any moneys borrowed or debt incurred (including a deposit, claim or other similar right or obligation) and includes any service fee or other charge in respect of the moneys borrowed or debt incurred or in respect of any credit facility which has not been utilised;]

Is the payment for purchases not regarded as debt for the company i.e debt can be trade debt also ..Since defination doesnot specifies ,

CA.D.RAGAVAN (CHARTERED ACCOUNTANTS) (219 Points)
Replied 06 March 2013

In my Opinion, Interest is Charged on Bill Amount is also Interest within the meaning of Sec.2(28A) and liable for TDS

sathianarayanan.t (chartered accountant) (267 Points)
Replied 07 March 2013

The interest paid is liable for tax deduction. Here, purchase of goods and payment of interest have to be delt with separately. When you purchase the product, the transaction is over when you got the invoice and goods. But interest payment is due the credit facility allowed by the creditor to the customer. It is actually debt to the concern. Then only this payment is called as 'interest payment'. If you pay interest or call it as interest payment, there is no doubt, you have to deduct tax. Further my advise is don't take any risk. Deduct the tax.