No TDS Leviable on NCDs and FDs of Less Than Rs5,000: SC
Moneylife Digital Team 31 October 2022
Dismissing a special leave petition (SLP) filed by the income tax (I-T) department, the Supreme Court ruled that tax deduction at source (TDS) is not chargeable on non-convertible debentures (NCDs) and fixed deposit (FD) of a value of less than Rs5,000.
In its judgement, the bench of justice MR Shah and justice MM Sundresh says, "We are in complete agreement with the view taken by the (I-T Appellate) tribunal (ITAT) as well as the high court (HC). Once there is no liability to deduct TDS on NCDs and FDs of the value less than Rs5,000, there is no question of charging any interest."
"However, at the same time, the issue of whether the levy of the interest was time-barred considering Section 201(1) / 201(1)(a) of the I-T Act, 1961 has not been dealt with and considered in HC, we keep the question of law on the aforesaid open," the apex court says.
The tax department has filed the SLP against an order passed by Allahabad HC on 22 August 2017 in the matter of Lucknow-based Jai Prakash Associates Ltd.
The SC bench says, "Having gone through the judgment and orders passed by the ITAT as well as the HC, we are of the opinion that no error has been committed by the tribunal and/or the HC on the chargeability of TDS amount on NCDs and FD of the value less than Rs5,000."
Petition for Special Leave to Appeal (C) No. 18744/2018 Date: 19 October 2022
Comments
BR
3 months ago
What was the case? Why did the value of FD & NCD come up? Why are higher values not exempted from TDS u/s sec. 149A, IncomeTaxAct? TDS on Interim Interest on Cumulative FD/NCD UNFAIRLY EATS into Interest & prevents the corpus from earning full interest. I often wrote to Govt to amend the section to exempt Interim Interest on Cumulative from TDS but got no reply. My Grievance against permanent loss of interest was unreasonably dismissed as only a Suggestion & not a Grievance. On phoning the Ministry, I was told that it will be placed before the Parliament Budget Session, two of which later passed, without result. I do not even know why it was not so placed.
r_ashok41
3 months ago
what is the rational behind this.
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