Approval of long term bonds and rate of interest for the purpose of Section 194LC of the Income-tax Act, 1961

CIRCULARNO.-15/2014
F.No.133/50/2014-TPL
Government of India
Ministry of Finance
Department of Revenue
(Central Board of Direct Taxes)
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New Delhi, the 17th October, 2014

Sub: Approval of long term bonds and rate of interest for the purpose of Section 194LC of the Income-tax Act, 1961-regarding.
 

Section 194LC of the Income-tax Act, 1961, introduced by the Finance Act 2012, provided for lower withholding tax at the rate of 5% on the interest payments by Indian companies on borrowings made in foreign currency by such companies from a source outside India. The benefit was available in respect of borrowings made either under an agreement or by way of issue of long term infrastructure bonds. The section further provided that such borrowing and the rate of interest should be approved by the Centra Government. Subsequently with a view to lower the compliance burden and reduce the time lag which would have arisen on account of case-by-case approval, the Central Government had decided to grant approval to all borrowings by way of loan agreement and long term infrastructure bonds provided they satisfy certain conditions. The approval and the conditions were detailed in the CBDT Circular No.7 of 2012 dated 21st September, 2012.

Detailed information has been attached herewith