02 October 2009
A partner and his brother has taken personal loan and give to to the Partnership firm the payment of loan is given by the firm on both loan.partner's loan is addition or secured loan of firm? And the amount of Brother who is not a partner is considered as unsecured loan and interest paid by firm with installments direct to bank is it liable for TDS on interest on unsecured loan? if yes then is the TDS deduct on banks installments as the nationalized banks exempts from tds on interest paid to them what will be treatment.?
02 October 2009
The first contract is b/w Bank & Partner's brother for loan Then an arrangement b/w firm & P's Br So though Int is paid directly to Bank it is being paid on behalf of P's br. So in books Int payment to Br hence TDS is applicable
03 October 2009
Sir, but how can i deduct TDS as the payment made to bank and bank is not ready to received deducted amount as the installments of personal loan? pls/ suggest what to do. i have disallowed the amount in tax audit but for whats abut next year
03 October 2009
Dear Ashish, So far as the partners personal loan is concerned it is addition to the capital account of partner and EMI payments represents withdrawl by the partner.
As regards personal loan of the brother of partner, it is an unsecured loan for the firm. From where the fund has been brought by the brother is irrelevant from the firms point of view. The firm has to make repayment of such loan to the brother. Therefore the TDS is applicable on interest paid. The only difference is that instead of making repayment to brother, firm is making payment to bank on the instruction of brother. It will not any make any difference if the payment is made to bank or any other person from the firms point of view.
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