NEW DELHI: The govt Monday exempted from source of revenue tax the pastime payable on rupee denominated bonds issued out of doors India by a company or a consider to a non-resident or a foreign corporate, a transfer aimed at expanding dollar inflow.
The pastime can be exempt on rupee denominated bond issued out of doors India all the way through the period from September 17, 2018, to March 31, 2019, the finance ministry mentioned in a statement.
As per I-T legislation, pastime payable by an Indian corporate or a business consider to a non-resident, together with a foreign corporate, on rupee denominated bond issued out of doors India prior to the July 1, 2020, was accountable for concessional charge of tax of 5 per cent.
Consequent to Prime Minister Narendra Modi reviewing the state of economy last week, the federal government had announced a multi-pronged strategy to comprise the current account deficit (CAD) and augment the foreign currencies inflow.
In this background, low value foreign borrowings through off-shore rupee denominated bond were additional incentivised to increase the foreign currencies inflow, the ministry mentioned.
"it has been decided that interest payable by an Indian company or a business trust to a non-resident, including a foreign company, in respect of rupee-denominated bond issued outside India during the period from September 17, 2018 to March 31, 2019, shall be exempt from tax, and consequently, no tax shall be deducted on the payment of interest in respect of the said bond under section 194LC of the (Income Tax) Act," the ministry added.
Legislative amendments in this regard will likely be proposed in due course, it added.
The govt has already announced 5 steps to arrest rupee depreciation and take care of current account deficit, together with removal of withholding tax on Masala bonds, leisure for foreign portfolio investments, curbs on non-essential imports.
The pastime can be exempt on rupee denominated bond issued out of doors India all the way through the period from September 17, 2018, to March 31, 2019, the finance ministry mentioned in a statement.
As per I-T legislation, pastime payable by an Indian corporate or a business consider to a non-resident, together with a foreign corporate, on rupee denominated bond issued out of doors India prior to the July 1, 2020, was accountable for concessional charge of tax of 5 per cent.
Consequent to Prime Minister Narendra Modi reviewing the state of economy last week, the federal government had announced a multi-pronged strategy to comprise the current account deficit (CAD) and augment the foreign currencies inflow.
In this background, low value foreign borrowings through off-shore rupee denominated bond were additional incentivised to increase the foreign currencies inflow, the ministry mentioned.
"it has been decided that interest payable by an Indian company or a business trust to a non-resident, including a foreign company, in respect of rupee-denominated bond issued outside India during the period from September 17, 2018 to March 31, 2019, shall be exempt from tax, and consequently, no tax shall be deducted on the payment of interest in respect of the said bond under section 194LC of the (Income Tax) Act," the ministry added.
Legislative amendments in this regard will likely be proposed in due course, it added.
The govt has already announced 5 steps to arrest rupee depreciation and take care of current account deficit, together with removal of withholding tax on Masala bonds, leisure for foreign portfolio investments, curbs on non-essential imports.
Interest on Re bonds issued abroad by Indian cos exempt from I-T
![Interest on Re bonds issued abroad by Indian cos exempt from I-T]()
Reviewed by Kailash
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September 18, 2018
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