Save Rs 499 on a 2-Year Ad-Free CAclubindia Pro Membership. Subscribe Now!

Deduction of tds on l.c disounting charges

Save Share

Join Us Follow Us Add as Source

This query is : Resolved

Report Follow Query Ask a Query

Querist : Anonymous

Querist : Anonymous (Querist)

24 May 2014 Letter of Credit is opened by the buyer in favor of supplier for supply of goods which ensures the payment to the suppler at the end of the period of L.C. Since the money is not received immediately, Supplier discount the L.C with bank . The supplier pays the L.C discount charges.

Queries :
1. L.C discount charges paid by the buyer to the supplier is covered in the nature of ' Interest' or ' Reimbursement'.

2. If it is covered under ' Interest' , is it subject to TDS u/s 194A.

3. If bank discount the L.C on expiry date or before expiry period and charge interest, is it subject to TDS.

thanks you

Rupesh Jain

Rupesh Jain (Expert)
Follow

24 May 2014 LC charges is reimbursement of bank charges. not TDS required.

intt. paid to bank not subject to TDs this exemption to banking company,LIC, UTI, or co operative society doing banking business.

You need to be the querist or approved CAclub expert to take part in this query .
Click here to login now

Join CAclubindia WhatsApp Finance Community & stay updated with the latest TAX news, compliance alerts and important updates all in one place!