MUMBAI: Since a fortnight, NRIs in Singapore, bankers, and wealth managers have been engaged in feverish discussions, often venting their views on social media, over the applicability of withholding tax linked to 'leveraged' foreign currency non-resident (FCNR) deposit schemes offered by Indian banks.For many, who had either committed funds or were close to signing up, the concern was palpable: a withholding tax (WTH) on interest on funds borrowed from India to invest in FCNR deposit could dramatically reduce or even wipe out the returns banks are promising.Singapore tax authorities have now cleared the fog on the matter in a reply to a specific query from ET.Responding to ET's question on whether Indians residing in Singapore have to pay WTH to the Singapore government on loan interest charged by banks in India, the Inland Revenue Authority Singapore (IRAS) said, "Under section 12(6) of the Singapore Income Tax Act 1947 ("ITA"), any interest in connection with any loan or indebtedness borne, directly or indirectly, by a person resident in Singapore is deemed to be derived from Singapore. In this regard, where an individual tax resident in Singapore pays interest to a bank in India, such interest is deemed to be derived from Singapore and Singapore withholding tax would apply."Also Read: Foreign capital inflows hit $32 billion as FCNR(B) deposits break 2013 recordThe IRAS email, from a spokesperson of the organisation, further said, "In particular, section 45 of the ITA would require the payer to withhold tax from the interest payment and pay the tax withheld to IRAS."Under the Singapore-India Avoidance of Double Taxation Agreement, a 10% WHT on the gross interest amount would be levied subject to meeting treaty conditions. "Notwithstanding the above, where the payment is made to a Singapore branch of an Indian bank, withholding tax is waived," said IRAS.