TDS Applicability

[Ethirajan Parthasarathy]

One of my client is trading in equity with Margin trading facility extended by ICICI SECURITIES LIMITED Is he liable for TDS on interest charged by ICICI SECURITIES LIMITED which is not a Banking company

[shwetal oswal]

Yes, he is liable to deduct.

[PRIYACHARAN SR]

TDS on payment of interest , other than interest on securities is governed by section 194 A of the Income Tax Act. Assuming ur client is an individual or a Hindu undivided family,

*whose total sales, gross receipts or turnover from the business or profession carried on by him exceed [one crore rupees in case of business or fifty lakh rupees in case of profession] during the financial year immediately preceding the financial year in which such interest is credited or paid, he/she shall be liable to deduct TDS under this section.

In this regard please note the following:

1) If the above* condition is satisfied, then he shall be liable to deduct TDS under section 194A, provided the interest amount exceed Rs. 5,000 in a financial year.

2) However if the status of your client is other than individual/HUF , then TDS has to be deducted irrespective of the turnover in the Previous FY, .

* My View.

AI Summary

TDS on interest under section 194A: deduction obligation for margin funding; individuals/HUF face turnover thresholds, others must deduct.
TDS on interest paid to a non-banking margin financier is governed by section 194A. Individuals and HUFs must deduct only if their preceding-year business or professional turnover exceeds the prescribed thresholds and the aggregate interest paid in the year exceeds the statutory exemption threshold. Payers other than individuals or HUFs must deduct TDS on such interest irrespective of turnover. The payer must determine status, apply the turnover and exemption conditions when relevant, and effect the deduction.