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of <h1>Multinational Firms Face Stricter Interest Deduction Limits Under New Tax Bill Targeting Cross-Border Profit Shifting</h1> Legal Analysis Summary:The document examines Clause 177 of the Income Tax Bill, 2025, addressing limitations on interest deductions in cross-border transactions. The provision restricts interest expense deductions to 30% of earnings before interest, taxes, depreciation, and amortization for companies with cross-border related party debt exceeding one million rupees. The rule aims to prevent base erosion and profit shifting by multinational enterprises, maintaining consistency with existing Section 94B of the Income-tax Act. Key features include carry-forward provisions for disallowed interest, specific exemptions for financial institutions, and anti-avoidance mechanisms targeting indirect financing arrangements through associated enterprises.
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