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TDS on interest amount

26 September 2024

I'm given some amount to my friend through banking channel and I'm getting interest every month from him since May 2024.My friend is not deducting TDS in interest amount.I will show that whole interest income in my upcoming IT returns.

Is it compulsory to deduct TDS?Is it legal or not ?If it is illegal,is there any alternative solution?

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5 Replies

Dhirajlal Rambhia (SEO Sai Gr. Hosp.) (174477 Points)
Replied 26 September 2024

What is your friend is doing? purpose of loan taken?

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Venkata Suresh (25 Points)
Replied 26 September 2024

He is a business man.For construction of his house,he taken some amount from me.

Dhirajlal Rambhia (SEO Sai Gr. Hosp.) (174477 Points)
Replied 26 September 2024

If he has used the amount for his personal use, he is not liable to deduct TDS on interest.

Khushbu (student) (2 Points)
Replied 26 September 2024

Is TDS compulsory? No, for a personal loan, TDS deduction is not required.
Is it legal? Yes, it is legal as long as the interest income is declared in your ITR.
Alternative solution: If it were a business transaction, you might need to deduct TDS, but for personal loans, there is no such requirement.

In your case, as long as the interest income is reported in your ITR, the transaction remains legal and transparent.

Venkata Suresh (25 Points)
Replied 27 September 2024

Thank you for your reply.

As I'm already said,my friend taken that amount to construct his house and he wants to earn rental income on that property.After getting rents,Is it possible to claim principal and interest amount part deductions in his ITR as like home loan taken from financial institutions.At present he is in old tax regime.