Legal and Practical Implications of TDS on Interest Withholding Tax on Foreign Borrowings : Clause 393(2) of the Income Tax Bill, 2025 Vs. Section 194LC of the Income Tax Act, 1961

TDS on interest for foreign borrowings consolidated under new clause, keeping concessional framework but raising definitional and transition issues.

Clause 393(2) consolidates concessional TDS treatment for interest to non residents on foreign currency borrowings, rupee denominated bonds and IFSC listed bonds, aligning mechanics and cut off windows with Section 194LC while differing in presentation and reliance on external definitions; Central Government approval remains a condition for specified instruments and drafting gaps on limits, definitions and transitional treatment may require subordinate rules to avoid interpretive disputes.