Concessional withholding on eligible foreign currency borrowings applies to qualifying interest paid by Indian companies and business trusts to non-residents.

Section 393(2), Table serial number 2, requires an Indian company or Business Trust to deduct tax at source at a concessional 5% rate on qualifying interest paid to a non-resident other than a company or to a foreign company. The interest must arise from specified foreign-currency borrowings, including qualifying loan agreements, long-term infrastructure bonds, or approved long-term bonds issued within prescribed periods. No monetary threshold applies, and deduction is made at the earlier of credit or payment. The concessional rate applies only to interest not exceeding the rate approved by the Central Government.

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