TDS on Interest from Infrastructure Debt Fund
Introduction
TDS must be deducted under section 194LB at 5% (plus surcharge and cess) on interest payments made by Infrastructure Debt Funds (IDFs) to non-residents, including foreign companies.
Key Provisions
- Deductor:The Infrastructure Debt Fund is making interest payments.
- Deductee:TDS applies only if the recipient is a non-resident or a foreign company.
- Threshold:No minimum threshold—TDS is applicable on all interest payments.
- Rate of TDS:
o 5% plus applicable surcharge and cess.
o Higher rates apply if PAN is not provided (Section 206AA).
- Time of Deduction:At the time of credit or payment, whichever is earlier.
Compliance Requirements
- Lower/Nil Deduction Certificate:Not available under Section 197 or 197A.
- Deposit of TDS:
o Payable via Challan ITNS 281 within 7 days from the end of the deduction month.
o For March deductions, deposit by 30th April.
o Government offices depositing TDS without a challan must deposit the TDS on the same day on which the tax was deducted.
- TDS Statement Filing:Quarterly submission in Form 27Q.
- TDS Certificate:Form 16A must be issued within 15 days from the due date of TDS statement filing.
Consequences of Non-Compliance
- Failure to Deduct or Deposit TDS:
o Interest liability under Section 201.
o Penalty under Section 271C (up to the non-deducted amount).
o Prosecution under Section 276B.
- Failure to Furnish TDS Statement:
o Penalty of Rs. 200 per day (limited to TDS amount) under Section 234E.
o Additional penalties under Sections 271H and 272A.
- Failure to Issue TDS Certificate:Liable for penalty under Section 272A.