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

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.