CA.R.S.KALRA
Quick Summary
194LD. (1) Any person who is responsible for paying to a person being a Foreign Institutional Investor or a Qualified Foreign Investor, any income by way of interest referred to in sub-section (2), shall, at the time of credit of such income to the account of the payee or at the time of payment of s
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FAQ :
Section 194LD deals with Tax Deducted at Source (TDS) on income by way of interest paid to Foreign Institutional Investors (FIIs) or Qualified Foreign Investors (QFIs) on investments in certain bonds and government securities.
It covers interest on investments made in rupee-denominated bonds of Indian companies, government securities (made between June 1, 2013, and July 1, 2023), and municipal debt securities (made between April 1, 2020, and July 1, 2023).
The TDS rate is 5% on the interest income, plus applicable surcharge and a 4% Health & Education Cess. If the deductee does not provide their PAN, the TDS rate will be 20%.
TDS must be deducted at the time of crediting the interest income to the payee's account or at the time of payment, whichever occurs earlier. Payment can be in cash, cheque, draft, or any other mode.
Yes, the section defines 'Foreign Institutional Investor' and 'Qualified Foreign Investor' as per SEBI regulations and circulars. It also defines 'Government security' and 'municipal debt securities'.
If tax is deductible under Section 194LD, then the provisions of Section 195 and Section 196D are not applicable to such payments.
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