Opinion Of Eminent Legal Luminaries On Controversial Issues

Whether Advocate Is Liable For TDS On Interest Payment?

QUERY: Mr. X a practicing Advocate who is subject to Tax Audit u/s. 44AB for the year ending March 31, 2008 having the following transactions during the financial year 2009-10

1. Constructed a house for self occupation & he is making payment to contractor Rs. 10,00,000/-.

2. Making payment to Architect for designing his house Rs. 1,00,000/-.

3. Borrowed funds from friends Rs. 10,00,000/- on which he wants to pay the interest.

Examine the applicability of TDS.
ANSWER: 1. Section 194(C) provides that no individual or HUF shall be liable to TDS on the sum credited or paid to the account of the contractor where such sum is credited or paid exclusively for personal purpose of such individual or any member of HUF.

2. Similarly second proviso to section 194J is also worded in the same language.

3. Yes, if an amount of interest exceeds Rs. 5,000/-, tax has to be deducted u/s. 194A.

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