India issues clarification on withholding tax benefits for foreign investors

MUMBAI Tue May 21, 2013 2:58pm IST

Rupee notes of different denominations are seen in this picture illustration taken in Mumbai April 30, 2012. REUTERS/Vivek Prakash/Files

Rupee notes of different denominations are seen in this picture illustration taken in Mumbai April 30, 2012.

Credit: Reuters/Vivek Prakash/Files

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MUMBAI (Reuters) - Foreign investors will be eligible to benefit from lower withholding taxes for interest income accrued between June 1, 2013 and May 31, 2015 regardless of when the debt was bought, the Finance Ministry said in a notice on Tuesday.

Last month the government had cut tax rates for foreign investors on interest income from government and corporate debt in the above period, but some investors had raised doubts about whether the benefits would apply only to debt bought during that timeframe.

The ministry also said foreign investors would not have to obtain a tax identity card known as the Permanent Account Number (PAN) to benefit from reduced withholding tax on long-term infrastructure bonds.

(Reporting by Archana Narayanan and Subhadip Sircar)

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