The Hindu Business Line : Interest on tax refunds cut to 6 pc

CORPORATES and high net worth individuals may no longer find it attractive to park their surplus funds with the taxman, with the Finance Ministry slashing the interest rate on refunds to 6 per cent per annum from the existing 8 per cent.

In other words, it may not be all that profitable now for corporate treasurers to deploy surplus cash by way of making liberal advance tax payments in the hope of obtaining a high return through subsequent refunds. Simultaneously, however, the Government has also reduced the interest chargeable by assessees on their overdues. The interest on such overdue amounts would be charged at 12 per cent against 15 per cent.

The new rates — effective from September 8 — have been applicable following the promulgation of the Taxation Laws (Amendment) Ordinance, 2003 amending the concerned provisions of the Income-tax Act, the Wealth-tax Act and the Expenditure-tax Act.

The ordinance has also inserted a new Section 10BA in the I-T Act to provide for a deduction of 100 per cent of the profits derived from export of wood-based handicraft items. It has also included ship-breaking in the exempted category for the purpose of Section 10(15)(iv) in respect of interest payable outside India.

Interest payable to the Nordic Investment Bank will also, henceforth, be exempt from income-tax.

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Interest on tax refunds cut to 6 pc