Computation of interest amount for the purpose of TDS

[pran shangari]

A machinery is acquired on hirepurchase basis on 36 EMI payment from a NBFC co such as Magma Leasing or L &T Financial Servies Ltd.My question is 1. Is there any obligation on the part of the purchaser to deduct tax at source, assuming it is partnership concern?If yes, then how will be the interest amount computed for the purpose of TDS?

AI Summary

Partnerships not required to deduct TDS on hire-purchase EMI interest; Section 194A clarifies principal-capital payment distinction. A query was raised regarding the obligation of a partnership concern to deduct tax at source (TDS) on interest for machinery acquired on a hire-purchase basis with 36 EMI payments from a non-banking financial company. The response clarified that hire-purchase transactions cannot be separated into interest and principal for TDS purposes under Section 194A. The installments are considered capital payments, and the scope of TDS on rent does not apply as the transaction is not rental in nature. Consequently, no TDS should be deducted from the EMIs.