Interest deemed to accrue in India: payments by residents, non-resident PEs and the government may be taxable. Income by way of interest is deemed to accrue or arise in India where payable by the Government or by residents (subject to exceptions for debts used for business or income-earning outside India) and where payable by non-residents in respect of debts used for business or profession carried on in India. For non-resident banks, interest paid by a permanent establishment in India to the head office or other parts outside India is deemed to accrue in India; the permanent establishment is treated as a separate and independent person and tax computation and collection provisions apply.