The Hindu Business Line : Decks cleared for tax waiver on IMD interest income

THE decks have been cleared for granting tax exemption to income earned by way of interest on the India Millennium Deposits (IMD) that were issued by the State Bank of India.

The Centre, through the Revenue Department, has now specified IMD as deposits for the purpose of Section 10 (15)(i) of the Income Tax Act, thereby enabling tax exemption for the income earned by way of interest on such deposits.

"We have only implemented what (exemption from income tax) was promised in the offer document of IMD at the time of launch of the deposits," a revenue department official said.

At the time of launch of IMDs, it was specified that such deposits would be free from Indian income tax, gift tax and wealth tax. Further, it was also said the tax benefits would be available for non-resident holders as well as donees/assignees and survivors who may be resident holders.

SBI mobilised about $5.5 billion through the IMD scheme, which was launched in 2000 and targeted non-resident Indians. The scheme was then launched primarily to bolster the country's forex reserves in the backdrop of rising crude prices and a slowdown in foreign capital inflows.

The IMDs were denominated in the dollar, the pound and the euro. The deposits carried an interest rate of 8.50, 7.85 and 6.85 per cent per annum payable half-yearly in the three currencies respectively. IMDs were available on either a cumulative or a non-cumulative basis.

The IMDs have a five-year tenure and are slated for maturity in November.

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page

Stories in this Section
Rupee steady; securities rise

Ujjivan Financial gets funding from Bellwether

Kotak Mahindra OM Life to focus on semi-urban areas

LIC premium by regional unit

Private non-life players' market pie up at 35 pc

`Catch 'em young to improve health insurance portfolios'

Decks cleared for tax waiver on IMD interest income

Corpn Bank's donation for flood-hit States

SBI opens RBO in Thrissur

GTF eyes 50% growth in turnover

`Increase rural banks operations'

T-Bills auction fully subscribed

Andhra Bank plans to mop up Rs 200 cr in Vizag, E Godavari