We are liable to audit under section 44AB and have high amount of default interest payable to the Income Tax Department. As per section 194A applicable to us TDS is deductible @ 10% if interest paid/credited during a FY exceeds Rs 5000/-. However, there is exclusion clause for not deducting TDS on interest paid by the Income Tax Department to the public but not the other way round (i.e. if Interest is paid/credited by any person in favour of Income Tax department).
Please, tell me whether we need to deduct TDS on interest paid or credited to the Income Tax Department?
If yes, how should we proceed with it as PAN of the Income Tax Department will be required for filing of TDS return later on?
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