Applicability of Withholding tax

[CA.ANCHAL RASTOGI]

1. A Indian Bank “A” arrange buyers credit for a Indian company “B” through its overseas branch. My question as follows: Whether withholding tax is applicable on interest payment by “B” to overseas branch of Indian Bank on maturity of buyers credit? 2. A Indian Bank “A” arranges buyers credit for a Indian company “B” through overseas branch of a foreign bank My question as follows: Whether withholding tax is applicable on interest payment by “B” to overseas branch of foreign Bank on maturity of buyers credit?

[Rama Krishana]

I believe you question is not so simple. It is highly dependent on determination of one question that whether such interest payable on maturity of credit is taxable in India. A detailed brainstorming is required.

[Anuj Gupta]

The answer of first query is NO and for the second query is YES.

AI Summary

Withholding tax on interest for cross-border buyers credit depends on Indian taxability; responses differed by bank type. Whether withholding tax applies to interest on buyers' credit paid to overseas branches of banks depends on whether the interest is taxable in India. The issue is framed for two scenarios: payment to an overseas branch of an Indian bank and payment to an overseas branch of a foreign bank. One reply states the question requires detailed analysis of Indian taxability; another gives opposite answers for the two scenarios, denying withholding for the Indian bank's branch and affirming it for the foreign bank's branch.