Tds on ecb

TDS 1686 views 3 replies

Prasad

Sr. Manager

617 Points Joined April 2011

We have taken a ECB loan from holding company to a tune of 1000K Euro, which has been duly approved by RBI. The ECB loan is repayable in installments 50K EUR every half year. As per the terms of the agreement the interest is charged on a half yearly average EUROBOR + 1.25%.

The invoices for the interest are received at the end of every half year and the same is paid along with the Principal. The due dates for the Principal payment is June and Dec every year.

Now the question is whether TDS is deductible for 31st March; the point it is only a provision and we don’t have the actual interest applicable for the period.

Replies (3)

CA Suri Kota

Assistant Manager @ EY

955 Points Joined November 2007

Hello Prasad,

I beleive you need to remit the TDS on Q4 as you create the provision in books. As you need to accrue for the interest expenses for Q4 in your books, per tax rules, you are supposed to remit the TDS on the same within the timelines specified in the Act.

Eventhough it is not payable in March & you dont have the actuals, would suggest to consider the recent rate and remit the TDS on such conversion. If you fail to do so, you will need to passon the TDS with interest at 1.5% pm.

Otherwise your tax auditor would find a place for default as part of Tax audit.

Rajagopalakrishnan R

PARTNER

1434 Points Joined May 2010

That is not all. The interest which you have provided in the books as payable will not be allowed as a deduction for the Fiscal year 2014-15. This will be allowed only in the year in which the TDS is madeand remitted. Section 40(a)(i)

Siddharth

article

96 Points Joined March 2011

Rule of tds says that tds to be deducted either at payment or credit of same in books of accounts which is earlier so even u didn't pay it u have to deposit same to govt or else pay interest @ 1.50 % pm