29 March 2016
If Interest Earned by an assessee from a unsecured loan lend by him, in which TDS has not been deducted by the payer of the Interest, then, under which of the following column the Amount of Interest Earned be Shown by the Receiver of the Interest in the Income Tax Return?
Schedule OS - Income from other sources 1 Income a Dividends, Gross 1a - ? b Interest, Gross 1b - ? c Rental income from machinery, plants, buildings, etc., Gross 1c- ? d Others, Gross (excluding income from owning race horses)Mention the source S. No. Source Amount 1 Income by way of Winnings from lotteries, crossword puzzles etc. ..? 2 OthersOthers .. ? Total (1di + 1dii+ 1diii) .. e Total (1a + 1b + 1c + 1d) 1e ..
29 March 2016
Sir, The TDS on Interest has not been deducted by the "Payer of the Interest" to the assessee because the GTI of the "Receiver of the Interest" is below the Exemption Limit of Income Tax Slab.
Will it attract any Penalising Provision in regards to "Non Deduction of TDS on Interest on Unsecured Loan" for either of the Parties i.e. "the receiver of the Interest" or "the Payer of the Interest"..?
31 July 2024
### Reporting Interest Income in Income Tax Return
When you receive interest from an unsecured loan and TDS (Tax Deducted at Source) has not been deducted by the payer, you need to report this interest income in your Income Tax Return (ITR). Here's how to fill out the relevant sections in the ITR:
**1. Reporting Interest Income in ITR:**
**Schedule OS - Income from Other Sources:**
- **1b - Interest, Gross:** - **Amount:** Report the total amount of interest earned from the unsecured loan here. - **Details:** This includes all interest income from various sources like fixed deposits, unsecured loans, etc.
**Example:** If you earned ₹20,000 as interest from an unsecured loan, you should report ₹20,000 in column 1b of Schedule OS.
**2. Other Income Reporting Sections:**
- **1a - Dividends, Gross:** Report dividends received from investments. - **1c - Rental Income:** Report any rental income from properties or other assets. - **1d - Others:** If the interest income does not fit into the above categories, report it under this section.
**In your case:**
- **1b - Interest, Gross:** ₹20,000 (Interest from unsecured loan)
### **Penal Consequences for Non-Deduction of TDS**
**For the Payer of Interest:**
- **TDS Obligations:** The payer is required to deduct TDS on interest payments if the interest amount exceeds the threshold limits prescribed under the Income Tax Act. - **Penalties for Non-Deduction:** Failure to deduct TDS can attract penalties under Section 271C of the Income Tax Act. The payer may also be liable to pay the interest amount under Section 201 of the Act for not deducting or depositing TDS.
**For the Receiver of Interest:**
- **Income Reporting:** The receiver of the interest must report the income in their return, irrespective of whether TDS was deducted or not. - **No Penal Provision for Non-Deduction:** There are no direct penal provisions for the receiver if TDS was not deducted by the payer. However, the receiver must report the income correctly and pay tax on it as per their applicable tax slab.
### **Summary:**
- **Reporting Interest Income:** Report the total interest income from unsecured loans in column 1b of Schedule OS in the ITR. - **Penal Consequences:** - **Payer:** Can face penalties for not deducting TDS on interest payments. - **Receiver:** Must report the income and pay tax accordingly. No direct penalties for non-deduction of TDS by the payer affect the receiver.
If there are any concerns about compliance or specific issues with the tax authorities, consulting a tax advisor or accountant would be advisable to ensure proper adherence to tax regulations and to address any potential issues.
CAclubindia
