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TDS Deduct on Buyers Credit

Sandy (Accountant) (35 Points)

28 May 2011

Sir will you pls tell me, Is TDS applicable in on Buuyer Credit Interst in normal case ?

Rply soon all expert.....

Thanx in Advance....

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7 Replies

U S Sharma (glidor@gmail.com) (21063 Points)
Replied 28 May 2011

if buyer credit is accumulated in purchase a/c at the time of accounting then no TDS, but if buyer credit is passed through P/L a/c as expenses then TDS applicable,

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Sandy (Accountant) (35 Points)
Replied 01 June 2011

But if we paid through indian bank then, Is applibale or not and if applicable then as per what section TDS applicable or somthing else proof

U S Sharma (glidor@gmail.com) (21063 Points)
Replied 01 June 2011

all depends on your own accounting, where you have booked the expenses,

if your purchase got added with such interest say 10000 purchase cost and 300 interest paid as credit, and you booked 10300 in purchase, then no TDS

if you have booked 10000 in purchase and 300 in interest on purchase, then TDS applicable on 300, no matter where you have paid the amount, but the beneficiary is seller. so you have to deduct TDS from seller.

Sandy (Accountant) (35 Points)
Replied 06 June 2011

ok with all due rwspect sir will u pls tell me wat section of income tax applicable in this case?

rpl soon..........

U S Sharma (glidor@gmail.com) (21063 Points)
Replied 06 June 2011

Section 194A for TDS @ 10% on interest exceeding 5000 in a year

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Sandy (Accountant) (35 Points)
Replied 07 June 2011

But sir as per Sec. 195 of Income Tax act state that if we are paid interest to indian bank then no need to deduct TDS i.e. Indian Banking Comapany Exempt uder this section...!!

So if u r NOT satisfied with this answer then pls give me some supportive answer....

Waiting for your answer.....rpl soon

Thanx A lot.......

MAS007 (ACCOUNTANT) (124 Points)
Replied 07 June 2011

Dear Sandy,

I fully agree with Mr. U S Sharma. But your interpretation of sec. 195 of Income Tax Act is not correct. Tax is to be deducted u/s. 195 if any interest or any othre credit(other than Salary) is made to a non corporate non resident assessee or to a company other than domestic company.

Regarding Interest to Banking ompany, Please note that tax is not to be deducted u/s.194A if payment of interest made to any banking company or public financial Institution.

Thanks

Moin Shaikh