TDS on Interest Paid to Overseas Bank

thank u bhaiya ..4 the information...!!

@ SANAJY BHAI

Noted: - Under the DTTA if loan has been taken from overseas bank which is established under foreign bank regulation of financial institution then Rate of TDS on Interest on loan will be either of Nil or lower RATE.

It means Rate will be NIL, because you cant have a rate lower than NIL

Ans:- yes.

Under the DTAA between Mauritius if loan has been taken from any bank which is establish under foreign bank regulation of financial institution then rate of TDS on interest in Nil." Is it only for DTAA with Mauritius or this rule is applicable to all bank which is establish under foreign bank regulation of financial institution.

Ans;- We need to chech DTTA with Foriegn Country

For Exp.

1. Under the DTAA between Mauritius if loan has been taken from any bank which is establish under foreign bank regulation of financial institution then rate of TDS on interest in Nil.

2. Under the DTAA between New York if loan has been taken from any bank which is establish under foreign bank regulation of financial institution then rate of TDS on interest in 10%, and normal rate on TDS IS 15%.

Conclusion ;- We check the foreign bank regulation as country wise not world wide.

Hope now you clered.

great information shared sir

keep sharin

cheers

I will like to add three more things:

1. In all the DTAA's  the provision that "if loan has been taken from overseas bank which is established under foreign bank regulation of financial institution then Rate of TDS on Interest on loan will be either of Nil or lower RATE", is NOT AVAILABLE, we need the check the specific DTAA for the same.
2. Also most of the times the Foreign Banks such as Citibank, HSBC have taken the certificate of lower or NIL deduction from ITO u/s 197, hence we should ask the Bank for the same before deducting any TDS.
3. If the Bank fails to provide certificate for lower or NIL deduction of TDS ,then the normal rate of TDS shall be 42.024% .

thnx for sharing this wonderful information....

Dear Navin Ji,

I have some query regarding the issue. Pl clarify.

How wud one determine the residential status. Since many banks have overseas branches but they are registered in other countries as separate identity as per laws of the respective country. 

Similarly many multinational companies/banks run their business under diff registered corporation in diff countries.

THank  for sharing sir

thanx for sharing sir...

Originally posted by : RAHUL SARIA (CA, CS)
	Dear Navin Ji, I have some query regarding the issue. Pl clarify. How wud one determine the residential status. Since many banks have overseas branches but they are registered in other countries as separate identity as per laws of the respective country.  Similarly many multinational companies/banks run their business under diff registered corporation in diff countries.

Rahul,

Although this query has been directed to Naveen, but I take this opportunity to give my views on the subject. In india RBI doesn't allow foreign banks to open a subsidiary rather they are mandatorily required to function as branch office. The same is being done so that in case of any default by Indian branch of foreign bank then the parent foreign Bank can be called to indemnify such default.

Other multinational corporations usually operate through a subsidiary route so that their liability is limited in India.

As regards the "residential status" any company incoporated in India shall be Indian resident and any branch opearting in India shall be non-resident as the branch has no identity of its own.

You can go through sec. 6 of IncometAx Act, 1961 for the same.

NIce One.

Nice Information, thanks for sharing....