IFSC-listed bond interest attracts concessional withholding where eligible issuers pay non-residents, subject to approved interest rates.

Section 393(2), serial number 4, requires Indian companies and Business Trusts to deduct tax on interest paid to non-residents or foreign companies for long-term bonds or rupee denominated bonds listed exclusively on a recognised stock exchange in an IFSC. No monetary threshold applies, and deduction is made at the earlier of credit or payment. The rate is 4% for specified earlier bond issuances and 9% for bonds issued on or after 1 July 2023. Concessional withholding applies only to interest up to the rate approved by the Central Government.

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