Category Archives: Withholding Tax

Withholding Tax

Interest Payment to Mauritius: 7.5% Withholding Tax

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In earlier article “WHT (Withholding Tax) on Interest on Buyers Credit” and “Withholding Tax (WHT) on Suppliers Credit Transaction”, we had discussed that if buyers credit or suppliers credit is arranged from Mauritius based bank / branches, there was no withholding tax on interest payment as per Double Taxation Avoidance Agreements (DTAA).

India-Mauritius Tax Treaty was amended on 10 May 2016 and got effective from 01 April 2017. In this article, only amendment related to Interest Payment  (Article 11) is covered.

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Form 15CA and Form 15CB, Withholding Tax

Form 15CA & Form 15CB applicable on All Payment

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Post below article CBDT has revised rules for form 15CA and Form 15CB effective from April 01, 2016. Refer article: Form 15CA and Form 15CB not Required for Import Payments

In revised notification issued by CDBT on 16th December 2015, effective 01’st April 2016, import payment has been made part of exempted list. Hence forth Form 15CA and Form 15CB will not required for the same during import transactions.

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Withholding Tax

Difference Between Sec 195 and Sec 194LC

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In earlier article 5% WHT as per Sec 194LC not applicable to Buyers Credit we had discussed on Sec 194LC. This article gives difference Between Sec 195 & Sec 194LC

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Form 15CA and Form 15CB, Income Tax, Withholding Tax

Revised Forms (15CA, 15CB) and Rules for payment to Non Resident

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Refer Revised Article:

Form 15CA and Form 15CB not Required for Import Payments

Post below article CBDT has revised rules for form 15CA and Form 15CB. Please refer above article for further detail.

In earlier article about Withholding Tax (WHT), we have discussed about the process and applicability of Form 15CA and 15CB. On 5th August, 2013 CBDT revised the guidelines on Form 15CA and Form 15CB and further amended on 02nd September 2013. Below article gives a summary of changes made.

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Form 15CA and Form 15CB, Withholding Tax

Tax Residency Certificate Not Required in Prescribed Format

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In September 2012, CBDT had prescribe a format in which Tax Residence Certificate (TRC) was required from April 2013. In the Amendments to Finance Bill 2013, requirement of prescribed format has been done away with. Below article gives further details on the same.

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Form 15CA and Form 15CB, Withholding Tax

Surcharge and Education Cess on Withholding Tax

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Earlier articles have discussed about applicability of Withholding Tax on Interest payment in case of Buyers Credit and Suppliers Credit. Readers have come back asking query whether Surcharge and Education Cess is applicable or not on withholding tax amount. Below article answers these queries.

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Suppliers Credit, Withholding Tax

Withholding Tax (WHT) on Suppliers Credit Transactions

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In earlier article we had discussed about WHT on Buyers credit. This article answers questions related to withholding tax on suppliers credit.

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Withholding Tax

Certificate of Tax Residency under DDTA (Withholding Tax)

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Note: As per Amendment to Finance Bill 2013, below requirement of prescribe format has been done away with.

Sec 90 of Income Tax Act 1961 has been amended by inserting Sec 90 (4). Details of the section has been given below. Sec 90 (4) have many implications, but this article is concentrating on its implication on Buyers Credit transaction.

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Withholding Tax

5% WHT as per Sec 194LC not applicable to Buyers Credit

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Provisions of newly inserted Section 194 LC for Tax Deduction by Indian Specified Company on Interest paid to Non resident / Foreign Company is not applicable to Buyers Credit.

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Form 15CA and Form 15CB, Withholding Tax

Form 15CA & 15CB Not Applicable on Interest payment to Indian Bank Branches

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As per Income Tax circular 04/2009 dated 29th June, 2009 (Circular Link provided below), Form 15CA and 15CB Certificate under Section 195 of Income Tax is required to be submitted in cases where payments are made to a non-resident.

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Form 15CA and Form 15CB, Withholding Tax

Country-wise Double Taxation Summary Chart on Interest

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Below Country-wise double taxation summary chart provides Tax rate and Article reference number applicable on interest payments to beneficiary outside India. Same will be useful at the time of filling up Form 15CA and Form 15CB

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Form 15CA and Form 15CB, Withholding Tax

Consequence of Non Deduction of Withholding Tax (WHT / TDS)

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As with other TDS defaults the consequences for Non deduction of Withholding Tax (WHT) may be broadly classified as under:

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Buyers Credit, Withholding Tax

Buyer’s Credit from Mauritius Based Foreign Bank

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Since last week or so, Foreign bank branches based out of Mauritius are either not able to quote or are quoting above the RBI prescribed ceiling for 6 months LIBOR + 200 bps.

Reason being, low liquidity has resulted into high cost of funds.

Above will affect those importers who used to arrange funds from Mauritius based Foreign Bank which were somewhat cheaper than Indian Bank overseas branches but did not want to get into withholding tax. As per Double Taxation Treaty with Mauritius, withholding tax on interest payment to Financial Institution is nil.

Now options with them are either to take funds from Indian bank overseas branches at higher cost or from Foreign bank and pay withholding tax on due date.

Buyers Credit, Withholding Tax

WHT (Withholding Tax) on interest on Buyers Credit

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What is WHT (Withholding Tax) ?

Under Sec 195 of Income Tax Act 1961, Tax is required to be deducted on the interest amount paid by the Indian corporate to overseas lenders (bank / suppliers) on the loans taken.

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