TDS U/s. 194R - Applicability on One Time Settlement (OTS) transactiions

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This discussion clarifies the applicability of Tax Deducted at Source (TDS) under Section 194R concerning One Time Settlement (OTS) transactions for loans. It uses a scenario where a bank offers an OTS for a defaulted loan to determine if TDS provisions apply. The general consensus suggests that TDS under Section 194R is not applicable in such loan settlement scenarios from the banker's perspective.

ABDUL SALAM

ABDUL SALAM (Querist)
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02 July 2022 Dear Expert,

Could you please provide me some education on the subject with an example....

Thanks & Regards

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)
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02 July 2022 One time settlement to whom.

ABDUL SALAM

ABDUL SALAM (Querist)
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02 July 2022 Dear Sir,

Scenario (example):
a) ABC Bank has given a loan to XYZ Company (domestic company) on 01.06.2000.
b) The loan has became NPA on 31.03.2022.
c) The outstanding amount of the loan as on 30-06-2022 was Rs.10.00 Cr. (Principal of Rs.4.00
Cr. & Interest of Rs.6.00 Cr.).
d) The bank has sanctioned OTS for an amount of Rs.8.00 Cr. on 02.07.22.

Hope I am clear with the above example. I am looking from the perspective of the banker.

Thanks & Regards,

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)
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02 July 2022 194R TDS not applicable in such a settlement.

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