TDS on interest on unsecured loans to partners

[Barkha Bahety]

There is a LLP firm which has taken unsecured loans from its partners and paid interest on the same. However it has not deducted TDS on the interest. Whether the firm is liable to deduct TDS on interest paid on unsecured loans taken from such partners?

AI Summary

LLP Firm Not Required to Deduct TDS on Interest Paid to Partners as per Section 194A(3)(iv) of Income Tax Act. A Limited Liability Partnership (LLP) firm took unsecured loans from its partners and paid interest without deducting Tax Deducted at Source (TDS). The query raised was whether TDS should be deducted on such interest payments. One response highlighted that Section 194A of the Income Tax Act mandates TDS on interest, including unsecured loans. However, other responses clarified that according to Section 194A(3)(iv), TDS is not required on interest paid to partners by a firm, including LLPs.