Tds under income tax act

Please clarify whether TDS is required to be made  interest  (on loan taken from EXIM Bank) payments made to EXIM Bank. In my view, Exim Bank is not a Bank under Negotiable Instruments Act. It has come into being by an Act of Parliament in 1981. Exim Bank is a lender and my company is a borrower. If so, at what rate?

   P P GOVINDACHARI

Replies (10)

You cannot deduct TDS from interest paid to Bank. Even if its not under NI Act but is governed by Banking Regulation Act.

I agree with Mr Mihir that TDS is not required to be made for Banks coming Banking regulation Act. Exim Bank is set up by an Act of Parliament. Whether TDS is required to made on interest payments against loan taken from exim bank , If so , at what rate. It is an ECB loan denominated in Euros.

No Company is allowed to use the word 'Bank' in their names unless it is a bank approved and licenced by RBI. Even if it is enacted as an Act in the parliament, it does not become independent from the regulations of banking regulation act and RBI. It is still a bank. UTI is a mutual fund company even if it has been enacted as an Act in the parliament, and it is subject to the regulations of SEBI.

As per section 196 of IT Act, no deduction of tax shall be made from any sum payable to

1) Government

2) Reserve Bank of India

3) Corporation established by or under a Central Act

4) Mutual fund specified under clause 23D

Originally posted by : Mihir

As per section 196 of IT Act, no deduction of tax shall be made from any sum payable to

1) Government

2) Reserve Bank of India

3) Corporation established by or under a Central Act

4) Mutual fund specified under clause 23D

Recently CBDT has issued a circular, which allows to any person dealing with bank, not required to deduct TDS  

NO TDS is required to be deducted.....

No TDS is required if  any paid to bank only.

 

I shall grateful if a copy of the cbdt circular is given in this regard

Originally posted by : Mihir

You cannot deduct TDS from interest paid to Bank. Even if its not under NI Act but is governed by Banking Regulation Act.

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