25 July 2009
Dear friends One of my client have interest earned on FD made out of FC A/c. TDS has been deducted from Interest income. How to show TDS in FC-3 Return. Whether it should be deducted from Interest income and only net interest should be shown in the FC return or should it be shown under as utilised balance coz we dont have any way to show advcne receivalbe
24 July 2024
In the context of FC-3 Return, which pertains to the annual return on foreign currency accounts (FCA) maintained by residents in India, the treatment of TDS (Tax Deducted at Source) on interest earned on fixed deposits (FD) made out of FC A/c (Foreign Currency Account) is as follows:
1. **Reporting Interest Income:** - Report the gross interest income earned on the FD in the FC-3 Return. This is the total interest amount before deducting TDS.
2. **TDS Deducted:** - Report the amount of TDS deducted on the interest income separately in the FC-3 Return. This is typically shown as a deduction or adjustment against the gross income.
3. **Net Amount to Report:** - The FC-3 Return should reflect the net amount of interest income after deducting the TDS. This net amount is what you would show as "Interest Income" in the return.
4. **Utilized Balance vs. Advance Receivable:** - In the context of FC-3 Return, there might be a section to report the "utilized balance" or the "advance receivable" related to the FC A/c. This usually pertains to funds transferred abroad or utilized for permissible purposes as per RBI guidelines. - TDS on interest income is not directly related to the utilized balance or advance receivable aspects. It should be separately reported under the appropriate section provided for TDS or deductions in the FC-3 Return.
To summarize: - Gross interest income earned on FDs from FC A/c should be reported in the FC-3 Return. - TDS deducted on this interest income should also be separately reported. - The FC-3 Return should reflect the net interest income (gross interest income minus TDS) under the relevant income section.
Ensure that the FC-3 Return accurately reflects the details of interest income and TDS to comply with RBI guidelines and income tax regulations. If in doubt, it's advisable to consult with a qualified tax professional or chartered accountant for specific guidance tailored to your client's situation and the latest regulatory requirements.
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