Tds to be deducted on payment of import to foreign bank?

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Bhargav Thakkar (Querist)

26 December 2014 Dear Sir/M'am,

Importer of Raw material makes payment of Import amount(L/C) plus Interest on such amount to foreign bank.

1) Whether TDS to be deducted on Interest amount?

2) And Whether 15CA/CB requires at the time of payment to Foreign bank?

Please reply as earliest as possible.

CA DVS Satyanarayana

CA DVS Satyanarayana (Expert)

26 December 2014 There is no need to deduct TDS on interest i.e.,LC discounting charges payable to Bank. U/s 194 A interest paid to Bank does not attract TDS.

Thanks,
DVS Satyanarayana

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Bhargav Thakkar

Bhargav Thakkar (Querist)

26 December 2014 Thank you Sir...But whether 15CA/CB required or not?

Bhargav Thakkar

Bhargav Thakkar (Querist)

26 December 2014 And sir Its a Foreign bank...!

CA Kumar Mukesh

CA Kumar Mukesh (Expert)

26 December 2014 Dear Mr. Satyanarayana, I like to open this query once again, as per notification no 56/2012 dated 31st December, 2012 the CBDT has exempt TDS provision for Payment towards
i) bank guarantee commission,
ii) cash management service charges,
iii)depository charges on maintenance of Demat accounts,
iv) charges for warehousing services for commodities
v) underwriting service charges
vi)clearing charges and
vii) credit and debit card charges
made to the banks which are listed in the Second Schedule of the Reserve Bank of India Act, 1934 (excluding Foreign Banks) can be made without TDS with effect from 1st January 2013.

And LC payments comes under definition of bank guarantee commission.

Therefore, LC charges paid foreign banks certainly comes under the TDS provisions under section 195 of Income Tax Act, 1961

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