Query:TDS on Interest on Capital to Partners
P.D.RUNGTA
Query:TDS on Interest on Capital to Partners
Dear Sir/Madam,
Kindly guide us for our query.
The query being: "If a Partnership Firm is paying Interest on Capital to its Partners, should TDS be deducted on the same?"
Regards,
Uma Shankar Agrawal
Reply:1
dear querist,
the partnership firm will not deduct tds from intt paid to partners as the governing section 194A specifically exempts it.
However, we need to have an answer to what happens in case the
partner(Who is a company) and pays intt on excess drawing or loan to the
partnership firm, i.e whether the intt paying partner will deduct tds or not
.the section is silent on vice versa applicability.
I had thrown open this query to this forum several times but could not get a
solution from the esteemed members.
Vinod Kumar Goyal,F.C.A.P.G.D in
A.D.R.
Senior Partner V.Goyal & Associates
Chairman:A.N.M.I.,e.i.r.c.
Chairman:D.P.A.I.,e.i.r.c.
Reply:2
Hi,
As per the provisions of Section 194A(3)(iv) of
the Income Tax Act any income credited or paid by a firm to a
partner of the firm is not liable for TDS.
Thanks & Regards
Aditya Dhanuka
Partner
SNC & ASSOCIATES
Chartered Accountants
Kolkata| Mumbai | Chennai | Gurgaon | Bengaluru
501 | Ashoka House | 5th Floor | 3A, Hare Street | Kolkata-700001 | India
Mob No: +91-9836543836 | Tel No: +91 33-22317108/22480712 | Fax No: +91 33-22317109
Reply:3
No, no tax is required to be deducted on Interest paid on Partners' Capital
Reply:4
Section 194A, specifically provide in clause in 3(iv) that section 194A shall not be apply if interest income credited or paid by a firm to a partner of the firm.
Regds
CA Shivesh Sharma
Reply:5
NO it should not as per law
--
CA. SANJEEV JHUNJHUNWALA
CHARTERED ACCOUNTANTS
56 METCALF STREET 2ND FLOOR, ROOM NO.2D KOLKATA
700012
PH:40056681, 9831248361
Reply:6
Dear umasankerji,
Pl refer Direct Taxes Ready Reckoner - Sec - 194A - Para 156 wherein it is clearly mentioned that the provisions of this section are not applicable in the following cases wherein it is mentioned that - " interest is credited or paid by firm to its partners"Hence No TDS applicable on interest on capital to partners -
Thanks & Regards
CA Bimal Kumar Bhoot
(M): +91 9437045720
SBN & ASSOCIATES.
Chartered Accountants
Bhubaneswar.
Ph : (0674) 2530166, 2533554
Reply:7
In the provisions of section 194A, in sub-section 3, a list of TDS provisions not apply to a persons are given as per (iv) - to such income credited or paid by a firm to a partner of the firm is out of the purview of TDS on interest payment to partners by a firm.
CA Pramod Dad
Mobile No. +91 98240-31207 (P Dad)
Reply:8
No, payament of Interest/Remuneration to partners is not subject to TDS.
Regards,
ADESH & CO.
Chartered Accountants
98302-36281
93303-24455
Reply:9
No tds is to be deducted from payment of interest to partners. Kindly see clause (iv) of sub-section 3 of Section 194A.
Thanks
CA. Pankaj Agrwal
225 Tej Kumar Plaza, Hazratganj,
Lucknow 226001
Phones: 0522-4009167
pan...@mgcoca.com; agrwal...@icai.org
Reply:10
Dear Sir
Please read Sec 194 A carefully and more carefully 194A(3)(iv) which expressly states that no TDS is to be deducted on any income credited or paid by a firm to its partners
The section 194A is reproduced below, the relevant portions are in red.
[Interest other than "Interest on securities".
7194A. 8(1) Any person, not being an individual or a Hindu undivided family, who is responsible for paying9 to a resident any income by way of interest9 other than income 10[by way of interest on securities], shall, at the time of credit of such income to the account of the payee11 or at the time of payment thereof in cash or by issue of a cheque or draft or by any other mode, whichever is earlier, deduct income-tax thereon at the rates in force :
12[Provided that an individual or a Hindu undivided family, whose total sales, gross receipts or turnover from the business or profession carried on by him exceed the monetary limits specified under clause (a) or clause (b) of section 44AB during the financial year immediately preceding the financial year in which such interest is credited or paid, shall be liable to deduct income-tax under this section.]
13[Explanation.—For the purposes of this section, where any income by way of interest as aforesaid is credited to any account, whether called "Interest payable account" or "Suspense account" or by any other name, in the books of account of the person liable to pay such income, such crediting shall be deemed to be credit of such income to the account of the payee and the provisions of this section shall apply accordingly.]
(2) 14[Omitted by the Finance Act, 1992, w.e.f. 1-6-1992.]
(3) The provisions of sub-section (1) shall not apply—
15[(i) where the amount of such income or, as the case may be, the aggregate of the amounts of such income credited or paid or likely to be credited or paid during the financial year by the person referred to in sub-section (1) to the account of, or to, the payee, 16[does not exceed—
(a) ten thousand rupees, where the payer is a banking company to which the Banking Regulation Act, 1949 (10 of 1949) applies (including any bank or banking institution, referred to in section 51 of that Act);
(b) ten thousand rupees, where the payer is a co-operative society engaged in carrying on the business of banking;
(c) ten thousand rupees, on any deposit with post office under any scheme framed by the Central Government and notified17 by it in this behalf; and
(d) five thousand rupees in any other case]:]
18[Provided that in respect of the income credited or paid in respect of—
(a) time deposits with a banking company to which the Banking Regulation Act, 1949 (10 of 1949) applies (including any bank or banking institution referred to in section 51 of that Act); or
(b) time deposits with a co-operative society engaged in carrying on the business of banking;
(c) deposits with a public company which is formed and registered in India with the main object of carrying on the business of providing long-term finance for construction or purchase of houses in India for residential purposes 19[and which is eligible for deduction under clause (viii) of sub-section (1) of section 36] 20[***],
21[* * *] the aforesaid amount shall be computed with reference to the income credited or paid by a branch of the banking company or the co-operative society or the public company, as the case may be;]
(ii) 22[***]
(iii) to such income credited or paid to—
(a) any banking company to which the Banking Regulation Act, 1949 (10 of 1949), applies, or any co-operative society engaged in carrying on the business of banking (including a co-operative land mortgage bank), or
(b) any financial corporation established by or under a Central, State or Provincial Act, or
(c) the Life Insurance Corporation of India established under the Life Insurance Corporation Act, 1956 (31 of 1956), or
(d) the Unit Trust of India established under the Unit Trust of India Act, 1963 (52 of 1963), or
(e) any company or co-operative society carrying on the business of insurance, or
(f) such other institution, association or body 23[or class of institutions, associations or bodies] which the Central Government may, for reasons to be recorded in writing, notify24 in this behalf in the Official Gazette;
25[(iv) to such income credited or paid by a firm to a partner of the firm;]
(v) to such income credited or paid by a co-operative society 26[to a member thereof or] to any other co-operative society;]
27[(vi) to such income credited or paid in respect of deposits under any scheme framed by the Central Government and notified28 by it in this behalf in the Official Gazette;
29[(vii) to such income credited or paid in respect of deposits (other than time deposits made on or after the 1st day of July, 1995) with a banking company to which the Banking Regulation Act, 1949 (10 of 1949) applies (including any bank or banking institution referred to in section 51 of that Act);
(viia) to such income credited or paid in respect of,—
(a) deposits with a primary agricultural credit society or a primary credit society or a co-operative land mortgage bank or a co-operative land development bank;
(b) deposits (other than time deposits made on or after the 1st day of July, 1995) with a co-operative society, other than a co-operative society or bank referred to in sub-clause (a), engaged in carrying on the business of banking;]
30[(viii) to such income credited or paid by the Central Government under any provision of this Act or the Indian Income-tax Act, 1922 (11 of 1922), or the Estate Duty Act, 1953 (34 of 1953), or the Wealth-tax Act, 1957 (27 of 1957), or the Gift-tax Act, 1958 (18 of 1958), or the Super Profits Tax Act, 1963 (14 of 1963), or the Companies (Profits) Surtax Act, 1964 (7 of 1964), or the Interest-tax Act, 1974 (45 of 1974);]
31[(ix) to such income credited or paid by way of interest on the compensation amount awarded by the Motor Accidents Claims Tribunal where the amount of such income or, as the case may be, the aggregate of the amounts of such income credited or paid during the financial year does not exceed fifty thousand rupees;]
32[(x) to such income which is paid or payable by an infrastructure capital company or infrastructure capital fund or a public sector company 33[or scheduled bank] in relation to a zero coupon bond issued on or after the 1st day of June, 2005 by such company or fund or public sector company 33[or scheduled bank].]
34[Explanation 1.—For the purposes of clauses (i), (vii) and (viia), "time deposits" means deposits (excluding recurring deposits) repayable on the expiry of fixed periods.
Explanation 2.—35[***]]
36[(4) The person responsible for making the payment referred to in sub-section (1) may, at the time of making any deduction, increase or reduce the amount to be deducted under this section for the purpose of adjusting any excess or deficiency arising out of any previous deduction or failure to deduct during the financial year.]
Explanation.—[Omitted by the Finance Act, 1992, w.e.f. 1-6-1992.]
Vivek Jaiswal & Co. - Cal
Reply:11
Not required . Please refer section 194A
Manoj kumar Kothary
Pramod Dayal Rungta Managing Partner: P.D.Rungta & Co., Chartered Accountants
Head Office: 21, Hement Basu Sarani, 3rd Floor , Room .No.317, Kolkata-700 001,West Bengal, India
Branches : Bhagalpur | Khatima | Mumbai | Ahemdabad | Bangalore
Homepage : http://www.pdrungta.co.in/
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