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Payment made to bank - tds is deductiable ?

Diwakar Mishra (Accountant) (136 Points)

09 September 2008

If a Pvt Ltd Company are making a pvt bank for mananging its share protofolio...tax is deductable on bank charges ?

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CA Ravish Trivedi (The Possibilities are Infinite...) (772 Points)
Replied 09 September 2008

Tax is not deductible in case of banks whether nationalise or schedule banks in case payment made by any person.

Diwakar Mishra (Accountant) (136 Points)
Replied 09 September 2008

Originally posted by :Raveesh
"	Tax is not deductible in case of banks whether nationalise or schedule banks in case payment made by any person.	"

Dear Raveesh

thanks....can this particular circular / notification is available on website ??

Late CA Sampat Jain (Chartered Accountant) (4772 Points)
Replied 09 September 2008

section 194(3)(iii) says: TDS is not applicable to

(iii) to such income credited or paid to—

(a) any banking company to which the Banking Regulation Act, 1949 (10 of 1949), applies, or any co-operative society engaged in carrying on the business of banking (including a co-operative land mortgage bank), or

(b) any financial corporation established by or under a Central, State or Provincial Act, or

(d) the Unit Trust of India established under the Unit Trust of India Act, 1963 (52 of 1963), or

(e) any company or co-operative society carrying on the business of insurance, or

(f) such other institution, association or body ⁷⁸[or class of institutions, associations or bodies] which the Central Government may, for reasons to be recorded in writing, notify⁷⁹ in this behalf in the Official Gazette

CA Ravish Trivedi (The Possibilities are Infinite...) (772 Points)
Replied 13 September 2008

Thanx Samapt

(Guest)

Originally posted by :CA Sampat Jain
"	section 194(3)(iii) says: TDS is not applicable to (iii) to such income credited or paid to— (a) any banking company to which the Banking Regulation Act, 1949 (10 of 1949), applies, or any co-operative society engaged in carrying on the business of banking (including a co-operative land mortgage bank), or (b) any financial corporation established by or under a Central, State or Provincial Act, or (c) the Life Insurance Corporation of India established under the Life Insurance Corporation Act, 1956 (31 of 1956), or (d) the Unit Trust of India established under the Unit Trust of India Act, 1963 (52 of 1963), or (e) any company or co-operative society carrying on the business of insurance, or (f) such other institution, association or body 78[or class of institutions, associations or bodies] which the Central Government may, for reasons to be recorded in writing, notify79 in this behalf in the Official Gazette	"

That is for income by way of interest other than interest on securities, does it cover fees paid to bank?

Y.N.Vinod (Consultant - Risk Advisory Services) (98 Points)
Replied 14 June 2010

Then what if the bank charges are paid to a foreign bank outside india by an indian company..?

Here, in this case the bank is not covered under banking regulations act. For example, an indian company has taken a loan from a foreign banker from Japan. He is paying the bank charges and interest on a monthly basis. Is TDS deductable on this transaction...?

Pls Clarify...

CA Kishore Tallam (Sr Manager - Corporate Account) (2716 Points)
Replied 14 June 2010

Hi Sampat..

The above exemption is applicable in case of Interest. But since the bank is managing portfolio of the company, it is considered to be rendering professional or technical services and accordingly TDS is applicable.