Exemption to Interest Income on Specified Offshore Rupee Denominated Bonds

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The ITA currently provides for a tax rate of 5% (plus applicable surcharge and cess) for interest payable with respect to moneys borrowed by an Indian company / REIT / InVT from a source outside India by way of the issuance of Rupee denominated bonds (at any time till June 30, 2020) subject to compliance with prescribed conditions and interest ceiling. These borrowings have now been further incentivized to augment the foreign exchange inflow in the country. Pursuant to a press release dated September 17, 2018, tax exemption has been announced for interest payable by an Indian company / REIT / InVT to a non-resident / foreign company in respect of Rupee denominated bonds issued outside India during September 17, 2018 to March 31, 2019. No tax will be deducted on the payment of interest on such bonds. The press release further states that legislative amendments in this regard will be proposed in due course.

Published In:Inter Alia - Quarterly Edition - September 2018 [ English Chinese japanese ]
Date: September 1, 2018