Concessional rate of tax on interest in case of overseas borrowings –extension period thereof.

Budget 2017, amend the section 194LC to provide that the

concessional rate of five per cent. TDS on interest

payable to a non-resident

by a specified company on borrowings made by it in foreign currency

from sources outside India under a loan agreement or by way of issue of any long-term bond including long-term infrastructure bond

will now be available in respect of borrowings made before the 1st July, 2020.

This amendment will be applicable from the previous year 2017-18 and will accordingly apply in relation to assessment year 2018-19 and subsequent years.


Budget 2017 also proposed to extend the benefit of section 194LC to rupee denominated bonds issued outside India before the 1st july 2020.

This amendment will take retrospectively from 1st April 2016.

Existing provision of section 194LC provides that the concessional rate of tax available on borrowing made under loan agreement at any time on or after the 1st July, 2012, but before the 1st July, 2017; or by way of any long-term bond including long-term infrastructure bond on or after the 1st October, 2014 but before the 1st July, 2017, respectively.

Budget 2017 extends the concessional rate of TDS to boost the economy by way of introduction of foreign capital.