TDS Query
kanamarlapudi venkatesh (articles student) (113 Points)
11 October 2018
Sir whether loan processing fees is subject to TDS deduction
2 Replies
eSmart Professionals
(2 Points)
Replied 11 October 2018
Hi
It is neither Interest nor Bank Charges. Also it is not covered under any Sections in 194. Thus in my view TDS is not applicable on Loan Processing Fees.
It is a Fee to process your loan and it is a service not covered under Sec 194 J neither it is Interest on the Loan you
get to be covered under 194A.
It is neither Interest nor Bank Charges. Also it is not covered under any Sections in 194. Thus in my view TDS is not applicable on Loan Processing Fees.
It is a Fee to process your loan and it is a service not covered under Sec 194 J neither it is Interest on the Loan you
get to be covered under 194A.
Puja Sharma
(CA)
(433 Points)
Replied 11 October 2018
As per Section 2(28A) defines the term Interest
"Interest" means interest payable in any manner in respect of any moneys borrowed or debt incurred (including a deposit, claim or other similar right or obligation) and includes any service fee or other charge in respect of the moneys borrowed or debt incurred or in respect of any credit facility which has not been utilised.
Processing fees is a part of interest. Thus the provisions of section 194A are applicable.
However according to Sub-clause (iii)(a) of section 194A(3) the provisions of section 194A(1) shall not apply to the income paid or credited to any banking company to which provisions of Banking Regulation Act, 194 applies.
Further, if the loan processing fees is to be paid to an NBFC then the provisions of Section 194A will apply and TDS to be deducted @ 10%.
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