TDS on interest to foreign holding co

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Satendra (Querist)
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01 October 2010 We have to pay interest to our hoding co in overseas. How much TDS should I deduct and under which section it covers.

CA. Anuj Gupta

CA. Anuj Gupta (Expert)
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02 October 2010 TDS should be deducted u/s 115A(1)(a)(B) @20% plus surcharge(If app.) plus cess . Also you should go into relevant DTAA of the country where the holding Co. is located and check the rates provided in the DTAA. Normally rate of tax is less in the DTAA's.

In case of any further query kindly don't hesitate in asking any further question/s.

Satendra

Satendra (Querist)
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04 October 2010 Many thanks for your answer but in my opinion this section does not deal with TDS but deal with Income tax on foreign companies. This says the income tax payable shall be aggregate of the amount of income tax calculated on the amount of income by way of interest at the rate of twenty percent. So kindly comment on it.

CA. Anuj Gupta

CA. Anuj Gupta (Expert)
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04 October 2010 You are partially correct, but if you see that any payment to non-resident is covered u/s 195 which unlike other sections (194A to L)does not provide the rate of TDS. For getting the rate of TDS we go to the Income Tax Rates applicable on foreign Companies.

Hope I am able to clarify you.

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