1) it would depend upon contract between parties .

2) if contract provides that in case of late payment by buyer interest would be charged at 18%pa then buyer has to pay said interest rate

3) contract would contain a provision that 30 days or 45 days be provided for making payment for goods sold and delivered

4) in case money is borrowed from money lender then money lender licence would be necessary .

5) if contract is silent about interest rate then seller would not be able to recover interest for late payments made

6) Section 194A deals with the provisions relating to TDS on interest other than on

securities. Tax is to be deducted under section 194A, if interest (other than interest on

securities) is paid to a resident.

NATIONAL CONSUMER DISPUTES REDRESSAL COMMISSION

NEW DELHI

Complaint Case No. 51 of 2007

Dated the 7th July 2008

M. B. SHAH, J., PRESIDENT

Charging of interest at rates in excess of 30% p. a. from the credit card holders by banks for the former’s failure to make full payment on the due date or paying the minimum amount due, is an unfair trade practice.

(ii) Penal interest can be charged only once for one period of default and shall not be capitalised.

(iii) Charging of interest with monthly rests is also an unfair trade practice.

(iv) Hence, the banks are directed not to indulge in the aforesaid unfair trade practices or repeat them.

1. To act as a Money Lender, a person is required to obtail license and Registration from RBI,

2. An interest payment clause for late payment can be incorporated in a sale agreement executed by both the parties,

3. No body can charge more than 30% per year as interest,

4. You shall have to deduct 1% TDS for the entire sale amount including interest before paying to the seller,

5. The said deducted TDS shall have to be deposited by you to the I.T. Department.

1. Consumer Dispute Redressal Forum deals with deficiency in service and unfair business practice as defined as per The Consumer Protection (Ammendment) Act, 2002,

2. If there is no clause mentioned in the said agreement for sell for late payment and still the seller claims it, then certainly you can approach the Consumer Forum,

3. Your future step will depend on what terms have you agreed in the Agreement for Sale signed by you.

If there is a stipulation for the rate of interest, from the parties voluntarily agreed upon, the Court must allow that rate up to the date of the suit subject to three exceptions;

(i) any provision of law applicable to money lending transactions, or Usurious Loans Act or any other debt relief law governing the parties and having an overriding effect on any stipulation for payment of interest voluntarily entered into between the parties;

(ii) if the rate is penal (under any debt relief law or market rate), the Court must award at such rate as it deems reasonable (as per prevailing market rate);

(iii) even if the rate is not penal the Court may reduce it if the interest is found excessive and the transaction was substantially unfair (subject to such observations and conditions supported by reasons).

Vithal Das Vs. Rup Chand .1967 AIR 188, 1966 SCR 164

If there is no express stipulation for payment of interest and rate of interest; the plaintiff is not entitled to interest much less at the rate claimed except on proof of mercantile or trade usage having the force of law or statutory right to interest like by Section 80 of the Negotiable Instruments Act & Section 23 of the Trusts Act or Section 61 of the Sale of Goods Act or the like or an implied agreement and under the provisions of the Interest A

economic times feb 10 2014

The RBI has removed the 26% interest rate cap on loans given by microfinance companies. Starting April 1, the interest rate will be linked to their cost of funds, and the regulator has prescribed the way interest should be worked out. Price decontrol will increase the supply of finance and enable the poor to turn to microfinance institutions (MFIs).

1. This is as per R.B.I. Guidelines,

2. File the consumer case as suggested in my earlier post.

1. The seller's right to charge interest for the delayed payment flows out of the agreement he made with the buyer. If the agreement has a clause for charge of interest then the clause can be enforced.

2. The rate of interest will be the one that is mentioned in the agreement alone.

3. No license is required to charge the above interest.