Withholding tax on cross-border interest limited for beneficial owners while exemptions apply to public financial institutions. Taxation of cross-border interest under the India-Luxembourg DTAA permits taxation in the recipient's resident State while allowing source State taxation subject to a cap when the recipient is the beneficial owner; specified public and agreed institutions are exempt. The Article defines interest as income from debt claims (excluding late-payment penalties), disapplies withholding limits where interest is effectively connected with a permanent establishment or fixed base, deems interest to arise where the payer resides unless borne by a permanent establishment elsewhere, and limits treaty treatment to arm's-length interest where special relationships inflate payments.