Deductibility u/s 194 A

[Anup Kumar Grover]

Whether TDS u/s 194A is required to be deducted on payment to interest on taking finance from the Indiabulls, Reliance Capital, GE Money, Chholamandlum, whether these are financial institutions or other wise financing cos

[DEV KUMAR KOTHARI]

yes, TDS is required because these are simply a companies engaged in business of financing they are not banking companies or bansk but NBFC. The exceptions from TDS are provided in S. 194A(3).Depending on the capacity of payer or the amount of interest paid by a person, there can be some exceptions. Company engaged in insurance business, receiving interest , is also exempt- it can be checked if any such company qualify for such exception u/s 194A (3) (iii)(e). The chances are remote, becasue insutrance business is usually carried in separate compnay due to applicable regulations.

[Guest]

The view of Sri Kothari is correct and as these companies are not banking/insurance companies, the interest component for the finance obtained would squarely liable for TDS u/s 194A.

AI Summary

TDS Mandatory on Interest Payments to NBFCs Under Section 194A; Exemptions Rarely Apply to Companies Like Indiabulls A query was raised about the requirement of Tax Deducted at Source (TDS) under section 194A on interest payments to companies like Indiabulls, Reliance Capital, GE Money, and Chholamandlum. Two responses confirmed that TDS is necessary as these entities are non-banking financial companies (NBFCs) and not banks or insurance companies. Exemptions to TDS under section 194A(3) exist, but they typically do not apply to these companies. It was noted that companies engaged in insurance might qualify for exceptions, but this is uncommon due to regulatory requirements.