Page 36 - Union Budget_2019

Union Budget 2019

for concessional rate of tax of five percent. Consequently, section 194LC of the Income-tax Act, 1961 (the

Act) provides for the deduction of tax at a lower rate of five percent on the said interest payment.

Consequent to review of the state of economy on 14th September, 2018 by the Prime Minister, the Finance
Minister has announced a multi-pronged strategy to contain the Current Account Deficit (CAD) and augment

the foreign exchange inflow. In this background, low cost foreign borrowings through off-shore rupee
denominated bond have been further incentivised to increase the foreign exchange inflow.

Accordingly, 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 17th September, 2018 to 31st March, 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 Act.

Legislative amendments in this regard shall be proposed in due course”.

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