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?

[KASTURI SETHI]

Section 194A of Income tax Act contains provisions regarding TDS to be deducted on interest payable like interest on fixed deposit, interest on unsecured loan. LLP firm is also covered under this Section.

[CASusheel Gupta]

As per section 194A(3)(iv), no TDS to be deducted.

Firm includes LLP as per seciton 2(23)

[Srinivas KA]

If the firm is paying interest to partners, then TDS is not required to be deducted as per Sec 194A.

Firm includes LLP

AI Summary

TDS on interest: whether LLP must deduct on unsecured partner loans, with conflicting views under section 194A provisions.
Whether an LLP must deduct TDS on interest paid to partners for unsecured loans is debated. One view treats an LLP as a firm and applies Section 194A to require TDS on interest including unsecured loans. A contrasting view invokes Section 194A(3)(iv) as an exemption, concluding no TDS is required on interest paid to partners. The material records these conflicting practitioner opinions without resolving the legal question.