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Tds on interest income

Bhumit (accountant) (166 Points)

03 April 2018

Hello !

I have a queary about TDS deduction.

If Partner Ship Firm A give unsecure loan to a Person B.

And a Person B Paid intrest yearly.

In this matter what is the rule for TDS & who is liable to Pay TDS ?

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7 Replies

RAJA P M ("Do the Right Thing...!!!") (128091 Points)
Replied 03 April 2018

Mr. B will be deduct TDS on Interest paid amount...

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Rahul Prajapati (Student) (2282 Points)
Replied 03 April 2018

Rule For TDS

Section 194A – TDS on Interest other than Interest on Securities

Section 194A deals with deduction of TDS on interest other than interest on securities like Interest on Fixed Deposits, Interest on Loans and Advances other than banks.

The Payer/Deductor shall deduct TDS if the amount of such interest paid or credited OR is likely to be paid or credited in a financial year, exceed

10,000 where the payer is
1. Banking company or any bank or a banking institution
2. Co-operative society engaged in the business of banking
3. Post office (on deposit under scheme framed and notified by Central Government).
5,000 in any other case

Rahul Prajapati (Student) (2282 Points)
Replied 03 April 2018

TDS will be deducted by Firm B, while making interest payment to Firm A

Bhumit (accountant) (166 Points)
Replied 03 April 2018

Thanks for Your reply.

But if Person B did not deducted TDS & did not file TDS Return and paid intrest to Firm A also, than what is the role of Firm A ?

Rahul Prajapati (Student) (2282 Points)
Replied 03 April 2018

Firm A will show that whole amount of interest as its Income and will pay Tax on that income itself.

But, if Firm B is liable to deduct TDS but didnt deduct then read Consequences

"Link" https://blog.cleartax.in/consequences-of-not-deducting-tds-timely/

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RAJA P M ("Do the Right Thing...!!!") (128091 Points)
Replied 03 April 2018

In case Mr. B is not under Tax Audit then he don't want deduct TDS...
Check out his nature of liable as per audit requirements...

Anirudh Shankar (2 Points)
Replied 05 June 2020

In view of the coronavirus pandemic spreading its wings and impacting the economy, Finance minister Smt. Nirmala Sitharaman declared a set of steps to enhance, extension of legislative and regulatory compliance's.

For delayed deposit of TDS, interest has been reduced to 9 % from 18% for those where the TDS is due from 20.03.2020 to 29.06.2020. This benefit is available only if such TDS is remitted to the credit of government on or before 30.06.2020.

Calculate interest on late payment, late deduction, & Filing of TDS using this TDS Interest Calculator:

https://officeanywhere.io/incometax/tds_interest_calculator