Section 194 A
This query is : Resolved
22 January 2011
Hi,
Whether a partnership firm is required to deduct T.D.S. while making payment of Interest on loan to Urban Co-op Society.
Kinddly suggest.
Thanking you,
Whether a partnership firm is required to deduct T.D.S. while making payment of Interest on loan to Urban Co-op Society.
Kinddly suggest.
Thanking you,
22 January 2011
Every person responsible for making payment of nature covered by TDS provisions of Income Tax Act shall be responsible to deduct tax.
However in case of payments made under sec. 194A, 194C, 194H, 194I and 194J in respect of individual and HUF, only if the turnover or professional receipt exceeds sum of Rs. 40 lakh or Rs. 10 lakh respectively (the limits will be Rs. 60 Lakh or Rs. 15 Lakh respectively w.e.f. 01.04.2010) in previous year, he is required to deduct tax at source.
In the given case payer is a partnership firm hence required to deduct TDS subject to threshold limit. For threshold limit and rates see below link---
https://www.caclubindia.com/forum/details.asp?mod_id=109491
However in case of payments made under sec. 194A, 194C, 194H, 194I and 194J in respect of individual and HUF, only if the turnover or professional receipt exceeds sum of Rs. 40 lakh or Rs. 10 lakh respectively (the limits will be Rs. 60 Lakh or Rs. 15 Lakh respectively w.e.f. 01.04.2010) in previous year, he is required to deduct tax at source.
In the given case payer is a partnership firm hence required to deduct TDS subject to threshold limit. For threshold limit and rates see below link---
https://www.caclubindia.com/forum/details.asp?mod_id=109491
22 January 2011
No need to deduct income tax as per the exception contained in section 194A (3)(iii)(a) of the Income tax Act,1961.
24 January 2011
Agree with Sir but subject to the satisfaction of condition mentioned in above reference. The full details are as below...
I am directed to invite a reference to the Board’s Circular No. 48 [F. No. 275/195/70-ITJ], dated 7-11-1970 [Clarification 2]. The Board has been requested to reconsider the views given in that circular. After a careful examination of the legal position the Board is of the view that to the following extent the earlier views need a modification. Where the supplier of goods makes over the usance bill/hundi to his bank which discounts the same and credits the net amount to the supplier’s account straightaway without waiting for realisation of the bill on due date, the property in the usance bill/hundi passes on to the bank and the eventual collection on due date is a receipt by the bank on its own behalf and not on behalf of the supplier. For such cases of immediate discounting the net payment made by the bank to the supplier is in the nature of a price paid for the bill. Such a payment cannot technically be held as including interest and therefore no tax need be deducted at source from such payments by the bank. Further, the buyer need not deduct any tax from the payment made by him on due date to the bank in respect of such discounted bill inasmuch as these payments to a bank or a banking cooperative society, conforming to the exemption granted by section 194A(3)(iii)(a).
I am directed to invite a reference to the Board’s Circular No. 48 [F. No. 275/195/70-ITJ], dated 7-11-1970 [Clarification 2]. The Board has been requested to reconsider the views given in that circular. After a careful examination of the legal position the Board is of the view that to the following extent the earlier views need a modification. Where the supplier of goods makes over the usance bill/hundi to his bank which discounts the same and credits the net amount to the supplier’s account straightaway without waiting for realisation of the bill on due date, the property in the usance bill/hundi passes on to the bank and the eventual collection on due date is a receipt by the bank on its own behalf and not on behalf of the supplier. For such cases of immediate discounting the net payment made by the bank to the supplier is in the nature of a price paid for the bill. Such a payment cannot technically be held as including interest and therefore no tax need be deducted at source from such payments by the bank. Further, the buyer need not deduct any tax from the payment made by him on due date to the bank in respect of such discounted bill inasmuch as these payments to a bank or a banking cooperative society, conforming to the exemption granted by section 194A(3)(iii)(a).
Guest
Guest
(Expert)
24 January 2011
If Urban Co-op Society is a bank, then only, TDS will not be required to be deducted?
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24 January 2011
Agree Moondra Sir...TDS not to be deducted Only if it is a "banking cooperative society".
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02 February 2011
If one is required to deduct tax, then how it should be deducted while making payment of installment, one should pay lesser amount to the extent of tds or else?
Moreover I want to draw your kind attention that the Society is not a bank but Urban Co-op Credit Society, Whether the TDS should be deducted or not?
Kindly help.
Moreover I want to draw your kind attention that the Society is not a bank but Urban Co-op Credit Society, Whether the TDS should be deducted or not?
Kindly help.
Guest
Guest
(Expert)
02 February 2011
I think it is new query but it is nor clear
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