Witholding taxes and foreign companies

Hello all,

 

I have currently got a query for all of you.

Let's say a Singapore company has a subsidiary in India. And that a (or many) shareholders have provided to a loan to the subsidiary company. 

Of course, this loan has it's own interest and will be repaid (no issues on defaulting etc.). What is India's legal stance on the intertest gained from this loan? And what happens when this interest gain is repatriated to Singapore? 

I understand the DTA agreement between the two nations may have an effect, but what is it?

 So this question basically asks for information on the taxation by the Indian Govt on interest paid to a foreign lender.

Thanking you.

Replies (2)

My thoughts on the query are as follows:-

  1. Singapore shareholders shall have to follow the External Commercial Borrowings(ECB) regulations under FEMA, before giving Loan to Indian company.
  2. There shall be transfer pricing requiremnt as Indian and Singapore parties are assocaites enterprises.
  3. As regards interest ,the same shall be taxable in India @ 20% but if DTAA provides any exemption then the same shall prevail.

 

Anuj

+91-9810106211

femaquery @ gmail.com

Agree with Anuj Sir.........................

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