Tds u/s. 195

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

11 April 2012

Our client has made and agreement with Singapore CITI bank for Buyers Credit for 180 days
We have to make payment towards principal as well as interest through USA CITI bank
USA CITI bank is only channel to make payment to CITI bank Singapore

My Queries :
1. Whether TDS is applicable if yes then under 195 or as per DTAA ????
2. Which company’s TDS we have to deduct ? ???

swasti

swasti (Expert)
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11 April 2012 Withholding tax has to be deducted u/s 195 of the IT Act. TDS u/s 195 would be deducted for the party to whom you are paying interest. In your case I suppose it is the bank. It should also be taken care that :

Sec 206AA of the Act specifies that :
If the payment attracts withholding tax and PAN is not so furnished by the recipient, tax is required to be withheld at the higher of the following rates:
1 i) Rate specified in the relevant section ;
ii) Rates in force (rate specified in the Finance Act orunder the tax treaty);
iii) Rate of 20%.

CA CS Amit S. Kedia

CA CS Amit S. Kedia (Expert)
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11 April 2012 Continue with Answer given by Ms. Swati.. You will have to see DTAA with singapore. If there is exemption then no TDS is required to be deducted.
You will have to collect PAN of the assessee and in any case TDS will not be deducted in excess of interest paid on principal.

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