Dtaa benefit is available under 194lc

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This query is : Resolved

CA Biswadipak Mohanty (Querist)

17 September 2015 Foreign currency Loans was taken from a UAE residence bank and withholding tax is deposited under section 194LC @ 5% and applicable surcharge and cess. DTAA with UAE provides for flat 5% for interest from bank. In this case whether DTAA benefit can be availed under section 90(2) of Income TaX Act 1961 which provides rate to be applied which is more beneficial to Assessee.

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)

17 September 2015 Yes DTAA benefit can be availed u/s 90(2).

Amol S Joglekar

Amol S Joglekar (Expert)

17 September 2015 Who is ASSESSEE in your query?

Loan giver or Loan taker?

and what benefit are you talking?

CA Biswadipak Mohanty

CA Biswadipak Mohanty (Querist)

17 September 2015 assesse is loan taker and benefit of lower rate of tax.

Amol S Joglekar

Amol S Joglekar (Expert)

18 September 2015 You can definitely avail the lower rate of tax benefit.
Are you aiming at SAVING in surcharge and cess?

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CA Biswadipak Mohanty

CA Biswadipak Mohanty (Querist)

18 September 2015 Yes sir. Since DTAA of UAE provide for flat rate of 5% tax for interest and as per 194LC it is 5% and applicable surcharge and cess.

Amol S Joglekar

Amol S Joglekar (Expert)

18 September 2015 DTAA provides that the term "tax" means "Indian tax" or "U.A.E. tax" as the context requires

Taking into account the Risk Reward ratio in this SAVING of so called surcharge, cess etc., take the call.

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