Supplier drawing hundi on buyer and routing it through his banker with instructions to charge interest on amount of hundi from date of acceptance to date of actual payment - Whether tax is deductible at source by party retiring hundi from interest at the time of making payment to bank
Contents
Plus +
Summary
Note
Bookmark
Share
✓ Copied successfully !
Print
Print Options
For full text, please login
Login to TaxTMI
Verification Pending
The Email Id has not been verified. Click on the link we have sent on
Tax deduction on routed interest: immediate bank discounting avoids TDS, agency collection requires TDS on interest. Tax deduction at source on interest for a hundi routed through a bank depends on the bank's role. If the bank immediately discounts the usance bill/hundi ... Summary
Tax deduction on routed interest: immediate bank discounting avoids TDS, agency collection requires TDS on interest.
Tax deduction at source on interest for a hundi routed through a bank depends on the bank's role. If the bank immediately discounts the usance bill/hundi and takes ownership, the net payment to the supplier is a price for the bill and not interest, so no tax is deductible by the bank or the buyer. If the bank merely acts as agent and collects on behalf of the supplier, the collection includes interest payable to the supplier and the buyer must deduct tax at source on that interest.
Full Summary is available for active users!
Note: It is a system-generated summary and is for quick reference only.
TaxTMI 
Join Channel
TaxTMI 
