TDS on Commercial Paper

This query is : Resolved

Niraj Khandelwal (Querist)
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26 January 2009 Commerical Paper are issued at Discount to the Face Value. Discount is basically the interest for the tenure of the instrument.
Is TDS deductible on the same and is there any relevant circular for the same

CA Hemant T Dewani

CA Hemant T Dewani (Expert)
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26 January 2009 tds is not applicable to commercial papers you are this sales transactons

Niraj Khandelwal

Niraj Khandelwal (Querist)
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26 January 2009 Mr.Hemant not clear on your reply.
As CP will be issued by the borrower, at the time of redemption will TDS be applicable on the discount portion.

Can you also give reference to the relevant circular as well which states no TDS is applicable on discount

K V Subba Rao

K V Subba Rao (Expert)
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26 January 2009 Although exact circular is not immediately traceable, Commercial Paper has more or less the same features as that of Deep Discount Bond. So it appears to me that interest portion by whatever it is called is liable for TDS

Cir No 2/2002 dt 15.02.02 may be perused

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