New Delhi Sep 17 (IANS) The government on Monday announced tax exemption on interest payable by Indian companies to non-residents including foreign companies on "masala bonds" issued till March 31 2019.
Till now interest payable on such bonds issued before July 1 2020 was liable for concessional rate of tax of five per cent.
The announcement came following Prime Minister Narendra Modi s economic review meeting on Friday after which Finance Minister Arun Jaitley had 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 bonds (also called masala bonds) have been further incentivised to increase the foreign exchange inflow " an official statement said.
"Consequently no tax shall be deducted on the payment of interest in respect of the said bond " it said adding that legislative amendments in this regard shall be proposed in due course.

--IANS vv/pgh/nir