Tds on guarantee

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Anwar Shaikh (Querist)

26 July 2011 Dear experts,

if an Indian Pvt Limited company pays, Interest on Guarantee given by a foreign bank (not having any branch in India) to a limited company in India.

Then whether TDS is deductible ?

E.g. :-

XYZ bank of korea has given guarantee to ABC limited of india for Rs.32 crores, against contract entered by ABC with PQR Pvt Limited.

PQR Pvt Ltd asked to XYZ Bank to give guanatee to ABC Ltd, for which XYZ bank of korea charged Rs.60Lacs as interest for 820 days @ 0.79%.

Now whether PQR Pvt Ltd should deduct TDS on Rs.60 Lacs ?

Please reply urgently...

CA Navin Jain

CA Navin Jain (Expert)

26 July 2011 YES, YOU NEED TO DEDUCT TDS,

THERE IS DTAA BETWEEN INDIA AND KOREA AND TDS RATE IS 10%,

CAN U TELL ME BANK NAME, IF BANK IS INDIAN BASED THEN NO NEED TO DEDUCT TDS.

Anwar Shaikh

Anwar Shaikh (Querist)

30 July 2011 Thank u sir.

Bank name is The Export Import Bank of Korea. (It is not a INDIAN bank)

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