The Income Tax Department has clarified the situation saying that there has been no change in the condition of withholding tax applicable at the rate of five per cent on the interest income of FPIs.
No change in status of withholding tax
The Income Tax Department clarified the situation on the reports about this, saying on Wednesday that there has been no change in the condition of withholding tax applicable at the rate of five per cent on the interest income of FPIs. There have been reports that this type of tax has been withdrawn.
Also read- Ration card holders now book ration with mobile app, know its benefits and how to registerThe Central Board of Direct Taxes said in a statement, “It is clarified that despite the amendment in Section 115AD of the Income Tax Act, there has been no change in the relevant provision.” Despite the amendment in this section through the Taxation and Other Laws (Amendment and Concession in various provisions) Act 2020, the interest income referred to in Section 194 LD of the law will continue to be taxed at a concessional rate of five per cent. ”
Taxation provisions on FPI income
While Section 115AD of the Income Tax Act provides for taxation on the income of FPIs, Section 194LD deals with the withholding tax on interest income from government securities of various institutional bonds of foreign institutional investors or eligible foreign investors. Issuers issuing bonds or debentures are required to deposit a maturity amount in the FPI’s account with a five per cent tax and deposit it in the government treasury.