Applicable exchange rate for tds on forex payment

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rajasekhar (Querist)
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31 March 2009 A foreign vendor provided technical assistance to m/s ABC co., with a payment terms as follows $30,000 USD and tax is to be borne by the foreign vendor at applicable rate.

M/s ABC made a liability in its books on 31.03.08 and deducted tds u/s 195 of IT act at applicable rate and deposited the same to IT department.(Dollar rate as on 31.03.08 was Rs.40 per USD, say)

Now actual payment is to be made by M/S ABC co to that the foreign vendor(i.e., $30,000 USD). Dollat rate at the time of payment is Rs.46 per USD, Say.

Question is: Whether additional TDS is to bne deducted on the amount increased due to exchange rate fluctuation or not?

Tushar Yerawar

Tushar Yerawar (Expert)
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31 March 2009 TDS is deductible at the time of credit or payment whichever is earlier.

As you have credited the sum on 31.03.2008 and deducted and remitted TDS no need to deduct the TDS on difference amount at the time of payment as the same is forex fluctuation.