TDS on Interest Payment to Foreign Bank

Anand (Practicing CA) (190 Points)

13 July 2011  


One of our client is making payment of ineterst on Buyers vcredit facility from Citi Bank N.A., Baharin 

I would like to know if they need to deduct TDS with following details

1. Payment of ineterst is to Bank ( foreign0

2. The Bank have PAN

3. There is no DTAA with Baharin

4.  In this case as per section 195 the rate of TDS should be

  a. rates in force

5. As per Sec. 206AA rates shuold be as per income Tax Act ( as the PAN is available) hence we have to refer to Sec. 194A as it is int. payment

6. Sec. 194A states if teh payment of ineterst is to baking or financial institution ( including foreign Bank as per Section 51 of BRA) no TDS should be done.

Does this means they need not deduct any TDS from the said payment.

Thanks in advance.