Page 35 - Union Budget_2019

Union Budget 2019

EXEMPTIONS

7.1 Promotion of External Borrowings

It is proposed to amend Section 10 to provide that interest income paid to a non-resident by a unit located
in IFSC in respect of monies borrowed by it on or after 1st day of September, 2019, shall be exempt in the
hands of non-resident.

For the above purpose,

"International Financial Services Centre" shall mean an International Financial Service Centre, the set-up
and operation of, which is approved by Central Government.
"unit" shall mean unit set up by an entrepreneur in a Special Economic Zone and includes an existing Unit,

an Offshore Banking Unit and a Unit in an International Financial Services Centre, whether established
before or established after commencement of this Act;

This amendment will take effect from 1st April, 2020 and will, accordingly, apply in relation to the
assessment year 2020-21 and subsequent assessment years

7.2 Exemption of interest income of a non-resident arising from borrowings by way of issue of Rupee
Denominated Bonds referred to under Section 194LC

To promote low cost foreign borrowing through offshore rupee denominated bonds, it was announced

through a press release dated 17th September, 2018 that interest payable by an Indian Company or a
business trust to a non- resident in respect of rupee denominated bond issued outside India from 17th
September, 2018 to 31st March, 2019 shall be exempt from tax. Accordingly, no TDS was required to be

deducted on payment of such interest.

Now, the aforesaid exemption provided via press release, has been proposed to be incorporated in the law

by amending Section 10. Consequently, no tax has shall be deducted undersection 194LC.

This amendment will take effect from 1st April, 2019 and will, accordingly, apply in relation to the
assessment year 2019-20 and subsequent assessment years.

Press release dated 17 September, 2018
th

“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 before the 1st of July, 2020 is liable

33