Concessional withholding on foreign-currency borrowing interest applies to qualifying non-resident payments by Indian companies or Business Trusts.

Interest on specified foreign-currency borrowings from sources outside India is subject to tax deduction at source at 5% when paid by an Indian company or Business Trust to an eligible non-resident or foreign company. It covers qualifying foreign-currency loans, long-term infrastructure bonds, and approved long-term bonds within prescribed periods. Tax is deductible at the earlier of credit or payment, without any monetary threshold. Concessional treatment applies only where statutory borrowing conditions are met and only to interest up to the rate approved by the Central Government.

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