Latest Expert Exchange Queries

GST Demo Service software link:
Username: demouser Password: demopass
Get your inventory and invoicing software GST Ready from Binarysoft
sitemapHome | Registration | Job Portal for CA's | Expert Exchange | Currency Converter | Post Matrimonial Ads | Post Property Ads
News shortcuts: From the Courts | News Headlines | VAT (Value Added Tax) | Placements & Empanelment | Various Acts & Rules | Latest Circulars | New Forms | Forex | Auditing | Direct Tax | Customs and Excise | ICAI | Corporate Law | Markets | Students | General | Mergers and Acquisitions | Continuing Prof. Edu. | Budget Extravaganza | Transfer Pricing | GST - Goods and Services Tax
Popular Search: ACCOUNTING STANDARD :: TAX RATES - GOODS TAXABLE @ 4% :: articles on VAT and GST in India :: due date for vat payment :: list of goods taxed at 4% :: empanelment :: ARTICLES ON INPUT TAX CREDIT IN VAT :: Central Excise rule to resale the machines to a new company :: cpt :: VAT Audit :: form 3cd :: TDS :: VAT RATES :: ACCOUNTING STANDARDS :: ICAI offer Get Windows 7,Office 2010 in Rs.799 Taxes
Direct Tax »
 E-filing of income tax return (ITR): How E-filing vault makes your account safer
 CBDT issues 24 FAQs on long term capital gains taxation
 Losing sleep over how to submit Income Tax investment proof? Your guide to glitch-free process
 Explanatory Notes to the Provisions of the Finance Act, 2017
 Here’s how you should approach tax planning
 Long Term Capital Gain under Finance Bill 2018
 Awareness drive on income tax returns filing
  Income Tax raid cases not to be processed under e-assessment: CBDT
 Income Tax raid cases not to be processed under e-assessment: CBDT
 CBDT chief to discuss revenue mobilisation with officers
 Income tax arises in the year of accrual or receipt of income

Approval of long term bonds and rate of interest for the purpose of Section 194LC of the Income-tax Act, 1961-regarding.
October, 30th 2014

                                    Government of India
                                     Ministry of Finance
                                  Department of Revenue
                               (Central Board of Direct Taxes)

                                                        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 Central
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.

2.     The Finance (No. 2) Act, 2014 has amended section 194LC with effect from the 1st
Day of October, 2014. Consequent to the amendment, the concessional rate of withholding tax
has been extended to borrowing by way of any long term bonds, not limited to a long term
infrastructure bond, if the borrowing is made on or after 1st day of October, 2014. Further, the
concluding date of the period of borrowings eligible for concession under Section194LC which
was earlier 01/07/2015 has been extended to borrowings made before the 1st day of July, 2017.

3.     Therefore, the approval of the Central Government is further required in respect of
long term bond issue and the rate of interest to be paid on such borrowings.
     4.        Considering the fact that there would be a large number of bond issues to be
     undertaken by Indian companies, providing a mechanism involving approval in each and
     every specific case would entail avoidable compliance burden on the borrower/issuer of
     bond. In order to mitigate the compliance burden and hardship, the Central Board of Direct
     Taxes [with the approval of t h e         Central Government] conveys the approval of the
     Central Government for the purposes of section194LC in respect of the issue of long term
     bond including long term infrastructure bond by Indian companies which satisfy the
     following conditions:-

a.   The bond issue is at any time on or after 1st day of October, 2014 but before the 1st day of
     July, 2017.
b.   The bond issue by the Indian company should comply with clause (d) of sub section (3) of
     section 6 of the Foreign Exchange Management Act, 1999 read with Notification No.
     FEMA3/2000-RB viz. Foreign Exchange Management (Borrowing or Lending in Foreign
     exchange) Regulations 2000, dated May 3, 2000, as amended from time to time, (hereafter
     referred to as "ECB regulations"), either under the automatic route or under the approval
c.                           The bond issue should have a loan Registration Number issued by the
     Reserve Bank of India (RBI).
d.   The term "longterm" means that the bond to be issued should have original maturity term of
     three years or more.

          5.   Further, the Central Government has also approved the interest rate for the purpose
          of section194LC in respect of borrowing by way of issue of long term bond including long
          term infrastructure bond as any rate of interest which is within the All-in-cost ceilings
          specified by the RBI under ECB regulations as is applicable to the borrowing through a
          long term bond issue having regard to the tenure thereof.
      6.     In view of the above, any bond issue, which satisfies the above conditions, would
      be treated as approved by the Central Government for the purposes of section194LC.

      7.     It is also clarified that consequent to the amendment to Section 194 LC the
      approval of the Central Government contained in Circular No.07/2012, in so far as they
      apply to borrowings by way of a loan agreement, shall be valid for the borrowings made
      on or before 30/06/2017 instead of 30/06/2015 as mentioned in the said Circular.

                                                              Director(TaxPolicy &Legislation)


1.                   PS to FM/OSD to FM/OSD to MoS(R).
2.                   PS to Secretary(Revenue).
3.                   The Chairman, Members and all other officers in CBDT of the rank of Under
      Secretary and above.
4.                   All P r . Chief Commissioners/ Pr.Director General of Income-tax­with a
      request to circulate amongst all officers in their regions/charges.
5.                   Pr.DGIT(Systems)/ Pr.DGIT (Vigilance)/ Pr.DGIT (Admn.)/ Pr.DG
      (NADT)/Pr. DGIT(L&R).
6.                   Media Co-ordinator and Official spokesperson of CBDT.
7.                   DIT(IT)/DIT(RSP&PR)/DIT(Audit)/DIT(Vig.)/DIT(Systems)/
8.                   The Comptroller and Auditor General of India (30copies).
9.                   Joint Secretary and Legal Advisor, Ministry of Law and Justice, New Delhi.
10.                  The Institute of Chartered Accountants of India, IP Estate, New Delhi.
11.                  All Chambers of Commerce as per usual mailing list.

                                                                               (Ashish Kumar)
                                                             Director (TaxPolicy& Legislation)
Home | About Us | Terms and Conditions | Contact Us
Copyright 2018 CAinINDIA All Right Reserved.
Designed and Developed by Binarysoft Technologies Pvt. Ltd.
Binarysoft Technologies - We Bring IT. Offshore software outsourcing company. We use Global Delivery Model (GDM) and believe in Follow The Sun principle

Transfer Pricing | International Taxation | Business Consulting | Corporate Compliance and Consulting | Assurance and Risk Advisory | Indirect Taxes | Direct Taxes | Transaction Advisory | Regular Compliance and Reporting | Tax Assessments | International Taxation Advisory | Capital Structuring | Withholding tax advisory | Expatriate Tax Reporting | Litigation | Badges | Club Badges | Seals | Military Insignias | Emblems | Family Crest | Software Development India | Software Development Company | SEO Company | Web Application Development | MLM Software | MLM Solutions