Tds on interest in buyers credit

This query is : Resolved

Guest

Guest (Querist)

26 September 2011 Dear Sir
We have taken loan through Buyers Credit with usance period of 90 days. TDS under section 195 needs to be deducted on interest to be paid to the foreign Bank. In this transaction It might happens that interest will be booked at one rate of Foreign Currency but at the time of Payment Interest Liability may increase due to variance in rate of Foreign Currency. Due to increase in the Interest amount TDS liability will also increase with the increase of Foreign Currency rate? Example is given below explaining our scenario:-

At the time of Credit:-
Interest 10 USD @ Rs.40 = Rs.400
TDS u/s 195@10% 1 USD @Rs.40 = Rs.40

At the time of Payment:-
Interest 10 USD @ Rs.50 = Rs.500
We would like to know whether TDS needs to be paid on Rs.100 paid extra as interest on Exchange Rate Variance?
Kindly guide us as soon as possible.

Thanks & Regards
Vishal Chandarana

CA Siddhartha Bhardwaj

CA Siddhartha Bhardwaj (Expert)
Follow

27 September 2011 The extra amount paid by you due to change in exchange rate is not interest. As per AS-11, it will be treated as foreign exchange fluctuation loss and will be transferred to P&L.

Your interest amount will always remain the same, in your case, Rs. 400.

So, there is no need to pay TDS on the excess amount.

Message likes : 1 times

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

Join the CA Students WhatsApp Community for ICAI Updates, Trending Courses & Notes!

Similar Resolved Queries

Unanswered Queries

Popular
Recent

Trending Online Classes

Direct Tax Laws & International Taxation May 26,Sept 26 & Jan 27

CA Arvind Tuli

Enroll Now
Audit Fast Track Recorded Batch For May 26,Sept 26 & Jan 27

CA Aarti Lahoti

Enroll Now
DT & Audit (Exam Oriented Fastrack Batch) - For May 26 Exams and onwards Full English

CA Bhanwar Borana & CA Shubham Keswani

Enroll Now

view all classess

Meet our CAclubindia PRO Members

rajkumar yadav

madhu sudan

Shivchandra Jakhotia

mohammad.asraf

Anirudh Sharma

Subscribe Now

Tds on interest in buyers credit

Similar Resolved Queries

Trending Online Classes

Meet our CAclubindia PRO Members

Quick Links

Browse by Category

Latest Job Openings

Senior Executive

Manager- Finance and Compliance

GST CONSULTANT

GST CONSULTANCY

Accountant

CA Final

Article Assistant

Associate CA