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Tds

CA Sonal (job) (55 Points)

20 April 2016

What will the TDS rate in case of payment made by an Indian company to a Foreign company on account of interest on Rupee denominated loan borrowed by the Indian company?

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4 Replies

Karthik.V.Kulkarni (Chartered Accountant) (594 Points)
Replied 21 April 2016

The interest is deemed to accrue or arise in India thus it is liable for tds. If your case doesnot come u/s 194LC then the tds rate would be 40% with sc ec and shec

CA Sonal (job) (55 Points)
Replied 21 April 2016

Thanku for your reply. As per recent CBDT circular no 17 dated 29 September 2015, withholding tax rate on interest income on such RDB’s shall be 5%. So in absence of any sepcific procisions in the act we can rely on the CBDT circular.

Karthik.V.Kulkarni (Chartered Accountant) (594 Points)
Replied 21 April 2016

Rupee denominated bonds payable to FII or Qualified foreign investor. And i think to the best of my knowledge loan is different from bond. Bond takes form of debentures. So summing up you cannot take the shelter of the circular.