TaxTMI 
TaxTMI 
Approval of loan agreements/ long term infrastructure bonds and rate of interest for the purpose of Section 194LC of the Income-tax Act, 1961- regarding.
X X X X Extracts X X X X
X X X X Extracts X X X X
.... --------- Dated: September 21, 2012 Subject: Approval of loan agreements/ long term infrastructure bonds and rate of interest for the purpose of Section 194LC of the Income-tax Act, 1961- regarding. The Finance Act, 2012 has introduced section 194LC in the Income Tax Act. This section provides for lower withholding tax at the rate of 5% on interest payments by Indian companies on borrowi....
X X X X Extracts X X X X
X X X X Extracts X X X X
....gs. 5. Considering the fact that there would be a large number of cases of overseas borrowings or bond issues to be undertaken by Indian companies, providing a mechanism involving approval in each and every specific case would entail avoidable compliance burden on the borrower/issuer of bond. In order to mitigate the compliance burden and hardship, the Central Board of Direct Taxes [with the ap....
X X X X Extracts X X X X
X X X X Extracts X X X X
....her under the automatic route or under the approval route. c. The borrowing company should have obtained a Loan Registration Number (LRN) issued by the Reserve Bank of India (RBI) in respect of the Agreement. d. No part of the borrowing has taken place under the said agreement before 1st July, 2012. e. The agreement should not be restructuring of an existing agreement for borrowing in for....
X X X X Extracts X X X X
X X X X Extracts X X X X
....aning as is assigned to it by RBI under the ECB regulations. C. Rate of interest Further, the Central Government has also approved the interest rate for the purpose of section 194LC as any rate of interest which is within the All-in-cost ceilings specified by the RBI under ECB regulations as is applicable to the borrowing by loan agreement or through a bond issue, as the case may be, having ....