Criminal Trident Pack: IPC, CrPC and IEA by Sr. Adv. G.S Shukla and Adv. Raghav Arora
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Shadab Khan   28 June 2022

NBFC NOT REFUNDING TDS U/S 194A of IT ACT

When a NBFC don't refund TDS paid on interest paid amount in a Financial year as per section 194A of Income tax act then what relief deductor has against NBFC in law?


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 2 Replies

Anila Sabu   30 June 2022

Dear Querist,

TDS needs to be deducted under Section 194A in the following circumstances: 

If the amount of such interest paid, credited, or anticipated to be paid, credited in a financial year exceeds, the payer/deductor shall deduct TDS.

where the payer is: 40,000

  1. a banking firm, a bank, or another financial organisation
  2. Cooperative society that does banking business
  3. Postal Service (on deposit under scheme framed and notified by Central Government).
  4. in every other instance, 5,000

No TDS would be taken from elderly people' interest earnings up to INR 50,000 starting in FY 2018-19. The following sources should yield the required amount of interest:

  1. deposits made at banks;
  2. payments made at post offices
  3. Fixed-deposit programmes
  4. Regular deposit programmes

However, the Council has asked that tax deduction at source (TDS) be waived on interest payments made to NBFCs.

Interest payments made to NBFCs must be taxed at a rate of 10% under Section 194A of the Income Tax Act. However, the clause grants exemptions to people who pay interest to organisations like banks, life insurance companies, and UTI.

They have therefore recommended that the Small Industries Development Bank of India (SIDBI) offer NBFCs a refinancing facility so that they can then lend to MSMEs and other suitable industries.

Shadab Khan   30 June 2022

Your answer didnt serve the purpose
My question if NBFC don't refund your TDS amount paid on their PAN as a compliance u/s 194A then what action in law can be taken against NBFC?

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