One of our client is PIO (person of Indian origin) holding his business in India. He has lend sizeable amount as unsecured loan to this business. Now they are contemplating to pay interest to the business owner in order to save potential tax liability of the business. My questions are
1. What % TDS would be applicable if such interest is paid ? If interest is paid even at 10 %, that will be close to 2 crores.
2. Is PIO required to file an income tax return similar to "normal resident" status individual ? Which means will he be subjected to similar slabs & rates ?
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