Foreign-currency borrowing interest attracts concessional withholding when paid by eligible payers to non-resident lenders under qualifying borrowing arrangements.

A 5% tax deduction applies where an Indian company or Business Trust pays eligible interest on specified foreign-currency borrowings to a non-resident or foreign company. Covered borrowings include qualifying foreign-currency loan agreements, long-term infrastructure bonds and approved long-term bonds issued within prescribed periods. No threshold applies. The concessional rate is available only for interest up to the Central Government-approved rate, determined with reference to the loan or bond terms and repayment conditions.

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