Due to high rates charged by Banks many people these days prefer taking Loans from NBFC’s.
TDS u/s 194A is attracted to such interest expense against NBFC loan @ 10% if interest payable is > INR. 5,000/-.
The confusion which always mints is Whether TDS deducted on Processing Fees too..??
Definition of Interest u/s 2(28A) – “interest” means interest payable in any manner in respect of any moneys borrowed or debt incurred (including a deposit, claim or other similar right or obligation) and includes any service fee or other charge in respect of the moneys borrowed or debt incurred or in respect of any credit facility which has not been utilised.
Processing fees to bank is paid after sanction letter is issued but before the disbursement of loan amount. Loan is subject to payment of processing fees. Processing fess is paid to borrow the money and not as compensation after borrowing the money.
Hence Processing Fees is not subject to TDS.!!
Author can be reached at ruchasom@gmail.com..!!
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i have paid loan processing fees to nbfc, on this transaction tds is applibcable or not if applicable then which section we have to deduct the tds.
If Consultancy fees Rs 450000 paid to consultant for Loan Processing whether TDS applicable or not
INSTANT LOAN COMPANY GET 30% CHARGE IS THAT LEGAL. SUPPOSE LOAN AMOUNT 10000 BANK TRANSFER 6500 .
Hey Ruchika
If we read defination of ‘interest’ provided under sec 2(28B) of income tax act, it contain a line, “includes any service fee or other charge in respect of the moneys borrowed or debt incurred or in respect of any credit facility which has not been utilised” which simply defines TDS should be deducted on Processing Fees under sec 194A
is tds applicable on loan processing fees nbfc
OUR COMPANY HAS TAKEN A LOAN FROM NBFC BANK OF RS 7.5 CRORE.
MY QUESTION IS WHAT IS THE TDS SECTION SHOULD WE PAID .
I READ IN CLAUSE 228A OF ICOME TAX ACT WHICH SHOWS 194A
PLEASE REPLY
Thanks,
Well explained.
Sir, Is there any case law which is supporting the above explanations.