The CBDT has rebutted media reports that concessional tax rate of 5% on interest income referred to in section 194LD as provided by proviso to section 115AD(1)(i) has been withdrawn. The board has clarified that there is no change in the said proviso even after amendment of section 115AD vide Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020.
| Section 115AD before amendment (Only relevant section reproduced) | Section 115AD after amendment |
| 115AD. (1) Where the total income of a [Foreign Institutional Investor] includes— (a) income [other than income by way of dividends referred to in section 115-O] received in respect of securities (other than units referred to in section 115AB); or (b) income by way of short-term or long-term capital gains arising from the transfer of such securities, the income-tax payable shall be the aggregate of— Provided that the amount of income-tax calculated on the income by way of interest referred to in section 194LD shall be at the rate of five per cent; | 115AD. (1) Where the total income of a [Foreign Institutional Investor] includes— (a) income [other than income by way of dividends referred to in section 115-O] received in respect of securities (other than units referred to in section 115AB); or (b) income by way of short-term or long-term capital gains arising from the transfer of such securities, the income-tax payable shall be the aggregate of— (i) the amount of income-tax calculated on the income in respect of securities referred to in clause (a), if any, included in the total income,— (A) at the rate of twenty per cent in case of Foreign Institutional Investor; (B) at the rate of ten per cent in case of specified fund; Provided that the amount of income-tax calculated on the income by way of interest referred to in section 194LD shall be at the rate of five per cent; The above sub clause (i) shall be substituted for existing clause (i) of sub-section (1) of section 115AD by the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020, w.e.f. 1-4-2021 |
