Requirement to obtain PAN to International finance corporation in respect of interest received by it

[madhavvan n]

A payment of interest to institution like International finance corporation is exempt from TDS as per provisions of sec 10(6) does this infer that IFC is not required to obtain a PAN in respect of payments received by it india in respect of the lendings it has made to Indian companies

[Surender Gupta]

Yes. Once an income is exempt by virtue of section 10(6) or any other exemption clause which itself is not require the PAN, the provisions of section 206AA are not attracted to such transaction. The provisions of section 206AA are plain and clear in terms that these are applicable only in case provisions of TDS are attracted. Relevant provisions are as under: "......any person entitled to receive any sum or income or amount, on which tax is deductible under Chapter XVIIB (hereafter referred to as deductee) shall furnish his Permanent Account Number to the person responsible for deducting...."

[Anuj Gupta]

Sir,Kindly clarify under which clause of sec 10(6)you the said exemption is provided.I have searched but not found any clause under sec. 10(6) which talks about the exemption of interest to institution like International finance corporation . If there is any such clause in Income Tax Act which makes the income not chargeable to tax then there is no requirement to deduct TDS and also to obtain PAN under sec 206AA.

[abhishek jain]

Hi Anuj,

I am also facing the same problem, whether you get any solution regarding your query?

Whether we need to deduct TDS in case of interest payment to IFC, yes then which section says? sec10(6) doesnt have any clause which exempt from deducting TDS.

AI Summary

PAN requirement for exempt interest payments may be inapplicable where the income is exempt under section 10(6), but views differ. The question is whether interest receipts claimed to be exempt under section 10(6) negate the obligation to furnish a PAN under section 206AA. One view holds that exemption from tax removes applicability of withholding provisions and the PAN requirement because section 206AA applies only where tax is deductible; another view contests the existence of a specific exemption for interest to international financial institutions and thus questions the non-application of TDS and PAN duties.