TDS on income by way of interest from an Indian Company or a business trust- Section 194LC of Income Tax Act 1963

Applicability of Section 194LC –

The Indian Company or a business trust paying interest income to a non-resident, not being a company, or to a foreign company is liable to deduct TDS.

Interest is related with money borrowed by the Indian Company or the business trust in foreign currency from a source outside India by way of issue of rupee denominated bond before 1^stJuly 2020.

Time of TDS deduction –

The Deductor is liable to deduct TDS within earlier of the below mentioned dates –

• At the time of payment thereof in cheque or cash or draft or any other mode of payment; or
• At the time of credit of interest income to the account of the payee.

 

Rate of deduction of TDS –

The Deductor is liable to deduct TDS @ 5% on gross Interest.