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The Central Board of Direct Taxes (CBDT) on Monday said no witholding tax will apply on interest payments made by an Indian company or a business trust to a non-resident in respect of offshore rupee denominated bonds issued between September 17, 2018 and March 31, 2019.
The move is expected to incentivise foreign exchange inflows into India through low-cost offshore rupee denominated bonds, popularly referred to as masala bonds.
Legislative amendments in this regard will be done in due course, an official release said.
It may be recalled that Finance Minister Arun Jaitley had on Friday announced a multi-pronged strategy to contain the Current Account Deficit (CAD) and augment the foreign exchange inflow. The withholding tax exemption is one such measure.
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