Tds u/s 193
This query is : Resolved
Querist : Anonymous
Querist :
Anonymous
(Querist)
22 September 2011
Dear Experts
One of our Foreign director has invested in our company Rs. 50 lacs towards debenture.
we have to pay 10% interest on the above ie 5lacs for which we have to deduct TDS.
My query is at what % we have to deduct TDS & how we have to file E -TDS for Foreign Director.
Pls help
Thanks in Advance
One of our Foreign director has invested in our company Rs. 50 lacs towards debenture.
we have to pay 10% interest on the above ie 5lacs for which we have to deduct TDS.
My query is at what % we have to deduct TDS & how we have to file E -TDS for Foreign Director.
Pls help
Thanks in Advance
22 September 2011
IF MONEY IS BORROWED IN F CURRENCY THEN TDS AS 20.6 PERCENT
OTERWISE TDS AT 30.9 PERCENT
CA MANOJ GUPTA
JODHPUR
09828510543
OTERWISE TDS AT 30.9 PERCENT
CA MANOJ GUPTA
JODHPUR
09828510543
Querist : Anonymous
Querist :
Anonymous
(Querist)
28 September 2011
Thanks & how we have to file E -TDS for Foreign Director.
28 July 2025
Here's a detailed answer for your query on **TDS under Section 193 for interest payment to a Foreign Director**:
---
### 1. **TDS Rate on Interest to Foreign Director (Section 193)**
* Interest paid on debentures to a non-resident (including a foreign director) is taxable in India.
* As per **Section 193**, TDS on interest paid to non-residents is generally at the rate of **20% + applicable surcharge and cess**, which roughly works out to **20.6%**.
* If the payment is made in **foreign currency**, then the tax rate is as above.
* If payment is in Indian Rupees, the rate is still the same but **grossing up** may apply depending on the tax treaty.
---
### 2. **DTAA (Double Taxation Avoidance Agreement) Consideration**
* India has DTAA treaties with many countries.
* The rate of TDS may be reduced if the foreign director’s country has a treaty with India.
* You must verify the applicable treaty and possibly deduct tax at a lower treaty rate, e.g., **10%** or **15%**, as per the treaty.
* Also, no surcharge and cess may apply if treaty benefits are claimed.
---
### 3. **Grossing Up**
* Section 195 requires you to deduct tax on **gross amount** (amount payable + tax).
* So, you may have to **gross up the interest** for TDS purposes if the tax is to be borne by the company.
---
### 4. **Filing E-TDS Returns**
* The TDS deducted on payment to non-resident directors must be reported in **Form 27Q** (Quarterly TDS return for non-salary payments to non-residents).
* You must file the return electronically (e-TDS).
* Form 27Q details:
* Deductor's TAN
* Deductee's details (Name, Address, Country, PAN or TAN if any)
* Amount paid
* TDS deducted and deposited
* Issue a **TDS certificate in Form 16A** to the foreign director.
---
### 5. **Other Points**
* Ensure to get a **Tax Residency Certificate (TRC)** from the foreign director to claim DTAA benefits.
* If PAN is not available, TDS rate may go up to **20% or more** as per penal provisions.
* Payment should be made through **normal banking channels**.
---
### Summary
| Parameter | Details |
| -------------------- | -------------------------------------- |
| Section | 193 |
| Usual TDS rate | 20% + surcharge + cess (\~20.6%) |
| Treaty benefits rate | As per applicable DTAA |
| Currency | INR or Foreign Currency |
| TDS Return Form | 27Q |
| TDS Certificate | Form 16A |
| Other | Gross up may be applicable, TRC needed |
---
If you want, I can help draft the e-TDS filing steps or a checklist for documentation needed for the foreign director.
Would you like that?
---
### 1. **TDS Rate on Interest to Foreign Director (Section 193)**
* Interest paid on debentures to a non-resident (including a foreign director) is taxable in India.
* As per **Section 193**, TDS on interest paid to non-residents is generally at the rate of **20% + applicable surcharge and cess**, which roughly works out to **20.6%**.
* If the payment is made in **foreign currency**, then the tax rate is as above.
* If payment is in Indian Rupees, the rate is still the same but **grossing up** may apply depending on the tax treaty.
---
### 2. **DTAA (Double Taxation Avoidance Agreement) Consideration**
* India has DTAA treaties with many countries.
* The rate of TDS may be reduced if the foreign director’s country has a treaty with India.
* You must verify the applicable treaty and possibly deduct tax at a lower treaty rate, e.g., **10%** or **15%**, as per the treaty.
* Also, no surcharge and cess may apply if treaty benefits are claimed.
---
### 3. **Grossing Up**
* Section 195 requires you to deduct tax on **gross amount** (amount payable + tax).
* So, you may have to **gross up the interest** for TDS purposes if the tax is to be borne by the company.
---
### 4. **Filing E-TDS Returns**
* The TDS deducted on payment to non-resident directors must be reported in **Form 27Q** (Quarterly TDS return for non-salary payments to non-residents).
* You must file the return electronically (e-TDS).
* Form 27Q details:
* Deductor's TAN
* Deductee's details (Name, Address, Country, PAN or TAN if any)
* Amount paid
* TDS deducted and deposited
* Issue a **TDS certificate in Form 16A** to the foreign director.
---
### 5. **Other Points**
* Ensure to get a **Tax Residency Certificate (TRC)** from the foreign director to claim DTAA benefits.
* If PAN is not available, TDS rate may go up to **20% or more** as per penal provisions.
* Payment should be made through **normal banking channels**.
---
### Summary
| Parameter | Details |
| -------------------- | -------------------------------------- |
| Section | 193 |
| Usual TDS rate | 20% + surcharge + cess (\~20.6%) |
| Treaty benefits rate | As per applicable DTAA |
| Currency | INR or Foreign Currency |
| TDS Return Form | 27Q |
| TDS Certificate | Form 16A |
| Other | Gross up may be applicable, TRC needed |
---
If you want, I can help draft the e-TDS filing steps or a checklist for documentation needed for the foreign director.
Would you like that?
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