loan gurantee fee as a commission

[MITSUI PRIME ADVANCED]

Dear Sir,

we have taken one loan form jabic japan, in such cases we are paying loan guarantee fee commission to their parents company in such cases pl. advice us service Tax and TDS both are attract on transaction

pl. advice.

Thanks & Regards

Arjun Sachdeva

AI Summary

Loan Guarantee Fee to Parent Company in Japan: Service Tax and TDS Implications Explained Under RCM and Tax Provisions A company sought advice on whether service tax and TDS apply to a loan guarantee fee commission paid to a parent company in Japan. Responses indicated that if the commission is paid outside India, the service receiver in India must pay service tax under the Reverse Charge Mechanism (RCM). The transaction falls under 'Banking and other financial services,' requiring service tax payment as per specific notifications. Additionally, it was suggested that processing charges could be considered as interest, necessitating TDS deduction according to relevant tax provisions.