Income Tax Bill Clause 177 Caps Interest Deductions for Indian Companies on Non-Resident Debt Over 1 Crore or 30% EBITDA

Clause 177 of the Income Tax Bill, 2025, limits interest deductions for Indian companies or permanent establishments of foreign companies in India when interest is paid on debt from a non-resident associated enterprise. Deductions are not allowed if such interest exceeds one crore rupees annually or 30% of earnings before interest, taxes, depreciation, and amortization, whichever is less. Exceptions include banking, insurance, or finance companies in International Financial Services Centres. Undeducted interest can be carried forward for up to eight years. The clause defines key terms like "debt" and "Finance Company" and outlines conditions under which these rules apply.