CA Babit Khurana (learning is my passion) (338 Points)
20 April 2010As per section 24(b) if interest paid out of india Tds should be deducted on this payment otherwise deduction is not allowed.
Q- If an individual who is a salary employee take loan from his friend who is NRI and paid interest on loan. Is he liable to deduct tds whether he is comes under catagory of section 44AB or not.
Q2- He is liable to take TAN no only for this transaction if there is no other transaction on which Tds is applicable.
Thanx in advance to all my friends.
Amir
(Learner)
(4016 Points)
Replied 20 April 2010
Dear Babit,
Yes beacuse if you look at Sec 195, the exemption (44AB) from deduction of TDS like in other cases is not there....
So TDS shall be deducted & TAN if not having already then has to be applied for........(even if this is the sole transaction)
Nicky
(Chartered Accountant)
(245 Points)
Replied 20 April 2010
Dear Babit,
A person i.e. an individual cannot borrow money on interest from a person o/s india thru the automatic route i.e. prior approval of RBI is needed...
However, interest free freindly loans cannot be borrowed if under the presrcibed limit
So if there is payment of interest kindly ensure prior RBI approval has been taken on loan
CA Babit Khurana
(learning is my passion)
(338 Points)
Replied 20 April 2010
Dear Nicky Sir all other condition is assumed to be satisfied
i have only query whether individual assesse is liable to deduct and pay tax on such payment.
Pl clearify.
Thanx for all your valuable comments dear friends
Max Payne
(employed)
(2574 Points)
Replied 20 April 2010
Babit, yes he is liable to deduct TDS.
Otherwise he cant claim deduction cos of section 25 which overrides section 24.
Nicky
(Chartered Accountant)
(245 Points)
Replied 20 April 2010
Amir has pretty well explained, i will just reiterate:
a) Sec 25 specifically disallows claiming interest if TDS has not been deducted and paid under Chapter XVII B i.e. section 195
b) Yes he is laible to take TAN
CA LOVELY ARORA
(C.A. B.Com (H) Graduate)
(2151 Points)
Replied 20 April 2010
all of above are right.......... TDS is required to be deducted...........
CAclubindia
