TDS u/s 194A or Capital Gains

TDS 728 views 2 replies

Yes,there is a written agreement on the condition that the borrower will repay the loan at the end of 3 years at the then market value of land or the lender can take the land after 3 years. Then what is the tax provision in this respect? TDS on notional interest or capital gain? Shall the borrower start deducting TDS u/s 194A on notional interest right from the beginning of the agreement & adjust the TDS at the time of repayment of loan or can the TDS be adjusted with the long term capital gain while giving away the land after 3 years? What if the notional interest does not exceed Rs 15,000/- i.e. Rs 5000/- p.a.? Can a pvt Ltd company make such an agreement without being NBFC? 

CA. Saurabh Mitra

 

Replies (2)

Dear Saurabh,

/forum/tds-u-s-194a-on-notional-interest-66528.asp

The tax provision will depend upon what happens at the end of the transaction. If loan repaid along with interest then provisions of Section 194A will apply.


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