TDS query.. urgent please help

There are 3 Companies A, B, & C.They are associated enterprises.Company A  and Company B are Indian Companies. Company C is a foreign company. Company A has given a loan to Company B. Company C has given a guarantee to Company A that incase if the company B defaults , Company C will make the default good. There is an agreement between Company B & C that Company B will pay Guarantee commission to Company C. Is this payment liable to TDS???

Replies (10)

Dear Anjana...It seems dat guarantee payable by Company B to Company C falls within the foreign payments and thus DTAA has to be applied...I guess this would have to be followed...see wht others hv to say...m not damn confident...

and i guess this vl b treated as business income of the company C as it doesnot fall under any article...

In my opinion as payment is made to Foreign Company so it will attract Section 195 payment to non resident as guarantee commission is accrued and arised in India as per Section 9.

Moreover if company will not deduct TDS on the payment then Section 40A willbe levied and expense will be disallowed.

I think it will attract TDS

Dear Anjana,

I agree with Sudhanshu's view.

agree with sudhanshu

Am Agree  with Mr. Sundhansu

First of all u say whether the company is interelated (means whether it is a subsidiary or holding company)

Hi Anjana,

The transaction is liable for TDS & the TDS payment has to be made as per Section 195. The rate applicable you have to check from the corresponding DTAA with that particular country .You can access it thru www.incometaxindia.gov.in , a direct link is given for DTAA on the home page then u can select the particular country and see the applicability.

AGREE WITH MR. SUDHANSHU ..SEC 40A WILL B ATTRACTED

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