tds on earnest money refund along with assured return

[satbir singhwahi]

the pvt ltd co. is receiving earnest money for allotment of plot. after the maturity of time period i.e 5 yrs, the amount is refunded along with assured return. whether tds u/s 194A is applicable on the difference amount, total amount received and amt refunded.

AI Summary

TDS on Refunds: Only Interest Portion Under Section 194A Subject to Tax Deduction, Not Earnest Money. A private limited company receives earnest money for plot allotment, which is refunded after five years along with an assured return. The query raised concerns whether Tax Deducted at Source (TDS) under section 194A applies to the difference between the total amount received and refunded. The response clarified that section 194A pertains to interest, and only the portion of the amount representing interest is subject to TDS. If the earnest money does not constitute interest, it should not be subject to TDS.