Rupee denominated bond interest attracts concessional withholding when paid to eligible non-residents within the approved interest rate.

Tax deduction at source on interest from rupee denominated bonds applies where an Indian company or Business Trust pays eligible interest to a non-resident other than a company, or a foreign company. Interest on bonds issued before 1 July 2023 is subject to deduction at 5% at the earlier of credit or payment, without a monetary threshold. The concessional rate is confined to interest calculated up to the rate approved by the Central Government, having regard to the bond or loan terms and repayment conditions.

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