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Tds on interest

CA Krishna Chaitanya M (Chartered Accountant) (463 Points)

11 January 2011

Mr x given loan to xyz partnership firm , xyz generally credits interest to parties at the end of year or at the time of clearance of loan amount, when xyz liable to deduct tds on interest ? at the end of march/settlement date or for every quarter because tds returns to be filed on every quarter?

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9 Replies

Vinay Luharuka (Student) (40 Points)
Replied 11 January 2011

If M/s XYZ files return quaterly then tds is to be deducted quaterly or at the most at the year end TDS Provision is to be made.

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Nilesh Jain (Assistant Manager) (1064 Points)
Replied 11 January 2011

If XYZ credits interest at the end of the year than tds is to be deducted at the end of the year.

CA MAULIK (C.A) (937 Points)
Replied 11 January 2011

tds on payment or credit we earlier..........

HITESH (chartered accountant) (441 Points)
Replied 11 January 2011

Originally posted by : Nilesh
	If XYZ credits interest at the end of the year than tds is to be deducted at the end of the year.

(Guest)

Tax is to be deducted at source at the time of credit to the payee’s account or on accrual of the payment at the end of the accounting year or at the time of payment in cash or by cheque or draft or by any other mode, whichever is earlier.

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Pulkesh Mehta (Chartered Accountant) (243 Points)
Replied 11 January 2011

TDS Liability to deduct applies :

1. Interest credited to Party's A/c

2. Payment to Party.

whichever is earlier

so in ur case xyz firm credits interest to parties on last date of year so TDS liability to deduct will arise on 31st March,but if if xyz firm made payment to Mr. x against Interest before 31st March, then TDS deduction liability will arise on payment date.

U S Sharma (glidor@gmail.com) (21063 Points)
Replied 11 January 2011

Originally posted by : chaitanya
	Mr x given loan to xyz partnership firm , xyz generally credits interest to parties at the end of year or at the time of clearance of loan amount, when xyz liable to deduct tds on interest ? at the end of march/settlement date or for every quarter because tds returns to be filed on every quarter?

at every march intermediate years and final on the date of payment.

Pothuganty sudheer (Consultant, C.A, C.S) (411 Points)
Replied 12 January 2011

Same answer as given by Pulkesh mehta.

Liability mto deduct arises on credit to party in books of account or payment which ever is earlier.

Accordingly, liability arises in the year end in the case given by you, as interest is credited at year end.

Rajendra Jaiswal (Student - IPCC) (58 Points)
Replied 13 January 2011

Mr X, I'm presuming, is the partner of the firm. If the firm, XYZ, credits interest to the partner, in that case, in my opinion, no TDS is to be deducted !!