Interest deduction limitation bars excess related party interest above an EBITDA threshold from being deductible. Limitation on deduction: where an Indian company or a permanent establishment borrows from a non resident associated enterprise, interest in excess of the lesser of interest paid to associated enterprises or an EBITDA based cap is not deductible. Certain third party lending guaranteed or matched by an associated enterprise is treated as associated party debt. Exemptions apply to banking, insurance, specified finance companies and notified NBFCs. Disallowed interest may be carried forward and claimed against future business profits subject to the same cap. Key terms defined include associated enterprise, debt, permanent establishment, Finance Company and International Financial Services Centre.