Tds on interest paid outside india u/s 195

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Ankur Bansal (Querist)
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06 October 2014 Hello All,

I have a client who has take housing loan from a bank and they are paying interest on the same, now need to know, my client as a resident is liable to deduct TDS u/s 195?.

Is the answer will be different if the Loan has been taken from any NBFC.

Nikhil Kaushik

Nikhil Kaushik (Expert)
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07 October 2014 195 is applicable only if the payment is being made to a party resident outside India. Kindly check if the same is true in your case as even the foreign banks lending in India, do so through their indian arms, Thus payments made to such entities get covered under section 194A an do not attract TDS liability.

Further, individuals are not required to deduct any TDS on payments to NBFC unless the said Individual is covered under provisions of tax audit under clause (a) or (b) of the section 44AB of the Income-tax Act, 1961

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