Ad Free CAclubindia and Daily Updates on your Mobile. Subscribe Now!

Interest on Foreign Currency Loans

Rachit (Analyst) (913 Points)

15 February 2010

Whether TDS is liable to be deducted on Interest paid on Foreign Currency loans taken from Foreign Banks?

Reply
Follow
Share

3 Replies

Ratan Deep Saxena (Asstt Manager (Accounts & Finance)) (2998 Points)
Replied 15 February 2010

Dear Rachit,

Plz see the below TDS Rate for your kind reference.

Form 27Q:

Section	Nature of Payment	Status	Tax (%)

194E	Payment to nonresident sportsmen or sports association		10
195(a)	Income from foreign exchange assets payable to an Indian citizen		20
195(b)	Income by way of long-term capital gain referred to in sec. 115E		10
195(c)	Income by way of Short-term capital gains u/s. 111A		15
195(d)	Income from other long-term capital gains		20
195(e)	Income by way of interest payable by Government/Indian concern on money borrowed or debt incurred by Government or Indian concern in foreign currency		20
195(f)	Royalty payable by Government or an Indian concern in pursuance of an agreement made by non-resident with the Government or the Indian concern after March 31, 1976, where such royalty is in consideration for the transfer of all or any rights (including the granting of a licence) in respect of copyright in any book on a subject referred to in the first proviso to section 115A(1A) to the Indian concern or in respect of computer software referred to in the second proviso to section 115(1A), to a person resident in India -
	1.Where the agreement is made before June 1, 1997		30
	2.Where the agreement is made after May 31, 1997 but before June 1, 2005		20
	3.Where the agreement is made on or after June 1, 2005		10
195(g)	Royalty (not being royalty of the nature referred to in (e) sub para) payable by Government or an Indian concern in pursuance of an agreement made by non-resident with the Government or the Indian concern and where such agreement is withan Indian concern, the agreement is approved by the Central Government or where it relates to matter included in the industrial policy, the agreement is in accordance with that policy
	1.Where the agreement is made after March 31, 1961 but before April 1, 1976	COMPANY	50
		OTHERS	30
	2.Where the agreement is made after March 31, 1976 but before June 1, 1997		30
	3.Where the agreement is made after May 31, 1997 but before June 1, 1997		20
	4.Where the agreement is made on or after June 1, 2005		10
195(h)	Fee for technical services payable by Government or an Indian concern in pursuance of an agreement made by non-resident with the Government or the Indian concern and where such agreement is withan Indian concern, the agreement is approved by the Central Government or where it relates to matter included in the industrial policy, the agreement is in accordance with the policy -
	1.Where the agreement is made after February 29, 1964 but before April 1, 1976	COMPANY	50
		OTHERS	30
	2.Where the agreement is made after March 31, 1976 but before June 1, 1997		30
	3.Where the agreement is made after May 31, 1997 but before June 1, 2005		20
	4.Where the agreement is made on or after June 1, 2005		10
195(i)	Any other income	COMPANY	40
195(i)	Any other income	OTHERS	30
196A	Income in respect of Units of Non-residents		20
196B	Income and Long-term Capital gain from units of an Off shore fund		10
196C	Income and Long-term Capital Gain from Foreign Currency Bonds or shares of indian companies		10
196D	Income of Foreign Institutional Investors for Securities		20
Surcharge ( On Tax)	Applicable for Foreign Companies if payment/credit exceeds Rs.1 crore of such companies		2.5
Education Cess	on Tax deducted Plus Surcharge		3

regards,

ratan

Upgrade to CAclubindia Pro. Subscribe Now!

Rachit (Analyst) (913 Points)
Replied 15 February 2010

Dear Ratan,

Agree that TDS is liable to be deducted u/s. 195(e) on Interest paid on monies borrowed in foreign currency but whether it is also applicable to loans taken from banking company. Whether sec 194A(3)(iii) which exempts TDS deduction in case of interest is paid to banking company to which Banking Regulation Act, 1949 is applicable, also applies to loans taken in foreign currency from foreign banks?