Guarantee Fee to Japan- DTAA

[Pradeep Kaushik]

Respected Sir/s,

MCI, India has raised working capital loan from Bank of Tokyo and MCHC, Japan, (Parent Company of MCI, India) has provided the bank guarantee to Bank of Tokyo, on behalf of MCI, India

Guarantee fee is now charged by MCHC, Japan to MCI, India.

Request you to confirm the TDS & Service tax liability in this Transaction.

With Regards.

AI Summary

Guarantee fee: recipient liable for service tax on bank guarantee charges, withholding tax status queried.
MCHC, Japan provided a bank guarantee for MCI India's working capital loan and charged a recurring guarantee fee calculated annually and billed monthly. The query asked whether TDS and service tax apply. The advisory reply in the forum states that the guarantee fee is subject to service tax and that the recipient (MCI) must pay the service tax; no conclusive comment on TDS was recorded.