I work in a Private Limited company where goods are imported against the letter of credit. We have to deposit a sum of rupees with the bank against the letter of credit as a Bank Guarantee. When we make the payment against letter of credit, Bank credit the amount of Bank Guarantee in our account including the interest. Should TDS be deducted by the on the interest of Bank Guarantee? If yes how can i claim it? Also, explain me what is difference between interest on Fixed Deposit & interest on other deposit i.e.interest on saving bank account.
15 March 2011
Generally Bank Guaranty will be given fund based & non fund based...in your case ...BG is fund based against Fixed Deposit...interest will be paid by bank and TDS also deducted by bank if exceeds the interest amount 10000/-(Ten Thousand)....
CAclubindia
