08 November 2014
One of my client being an Individual engaged in Explosive Business for which he purchased Trucks on loan basis from NBFC Companies.
He is repaying the said loan in terms of EMI for which the NBFC has taken either Advance cheques of EMI or paid through ECS from on specified date on each month.
Now query is as i) Whether Such EMI which is inclusive of Interest being payable to NBFC om monthly basis is subject to TDS under section 194A of I.T.Act if total interest amount exceeds the prescribed limit i.e. Rs.5000/-
ii) If the same is covered under TDS then how to deduct TDS on monthly basis from NBFC as EMI has already paid either in Advance by way of Cheques to them for loan period or availing Bank ECS facility which debits EMI on each month in my client account without deducting TDS. In nutsell what procedure to be followed for TDS deduction on Interest payment to NBFC on monthly basis or otherwise else.
08 November 2014
Yes, generally for emi payments of NBFC one might have given post dated cheques... . . Better process to comply with tds provisions is as below . . Pay TDS on interest paid as per 194A every month from your pocket.after completion of quarter you may file tds return and download TDS certificate.
You may send this TDS Certificate to NBFC and may ask for re-imbursement of TDS paid to comply with income tax act provisions.they will re-imburse the same to you.
Same is followed in case of loan taken from tata capital services and they are reimbursing duly as and when tds certificate provided.
Note: please ask NBFC whether they have any lower deduction certificate as given under section 197 and proceed accordingly
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