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of <h1>New Rules Cap Interest Deductions for Indian Firms Under Income Tax Act Section 94B, Following OECD BEPS Plan</h1> Section 94B of the Income Tax Act, 1961, aligns with the OECD BEPS Action Plan 4, limiting interest deductions for Indian companies or permanent establishments of foreign companies in India. It applies when interest expenses exceed 1 crore and involves debt from associated enterprises. The section deems debt issued by non-associated lenders as associated if backed by guarantees or matching deposits. Exclusions include banking or insurance entities and specified non-banking financial companies. Excess interest, beyond 30% of EBITDA, is non-deductible but can be carried forward for up to eight assessment years. Specific conditions apply to finance companies in International Financial Services Centres.
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