Now Indian Corporate can issue Rupee Denominated Bonds Outside India

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    CBDT vide its press release dated 29-10-2015 (F No 149/222/2015-TPL (Part-I)) has clarified about ‘Rupee Denominated Bonds issued by Indian Corporate Outside India’ for which Reserve Bank of India has recently give permission to issue .

    The matter of taxation of income from such bonds under Income-tax Act, 1961 has been considered by the Government. In so far as taxation of interest income from these INR off-shore bonds in the case of non-resident investors is concerned, it is clarified that withholding tax at the rate of 5 %, which is in the nature of final tax, would be applicable in the same way as it is applicable for off-shore dollar denominated bonds.

    Further, it has been decided that the Capital gains, arising in case of appreciation of rupee between the date of Issue and the date of redemption against the foreign currency in which the investment is made, would be exempted from capital gains tax. Legislative amendment in this regard will be proposed through the Finance Bill, 2016.

    Complete Press release is as under:

    F No 149/222/2015-TPL (Part-I)

    Government of India
    Ministry of Finance
    Department of Revenue
    Central Board of Direct Taxes
    PRESS RELEASE
    New Delhi, 29 th October, 2015
    Subject: Taxation of income from off-shore Rupee Denominated Bonds-reg.
     
    The Reserve Bank of India has recently permitted Indian corporates to issue rupee denominated bonds outside India.The matter of taxation of income from such bonds under Income-tax Act, 1961 has been considered by the Government.
    In so far as taxation of interest income from these INR off-shore bonds in the case of non-resident investors is concerned, it is clarified that withholding tax at the rate of 5 percent, which is in the nature of final tax, would be applicable in the same way as it is applicable for off-shore dollar denominated bonds.
    Further, it has been decided that the Capital gains, arising in case of appreciation of rupee between the date of Issue and the date of redemption against the foreign currency in which the investment is made; would be exempted from capital gains tax. Legislative amendment in this regard will be proposed through the Finance Bill, 2016.
    (Shefali Shah)
    Pr. Commissioner of Income Tax (OSD)
    Official Spokesperson, CBDT
    Now Indian Corporate can issue Rupee Denominated Bonds Outside India

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