The Central Board of Direct Taxes (CBDT) issued the clarification on the continuation of the concessional rate of tax on interest income of Foreign Portfolio Investments (FPIs).
The Board has clarified that the concessional rate of 5% will continue to be applicable on certain interest income of FPIs.
Section 115AD of the Income-tax Act, 1961 inter alia contains provisions for taxation of income of FPls. Proviso to section 115AD(1)(i) provides that the tax shall be chargeable at the concessional rate of 5% on interest income referred to in section 194LD.
There are reports in certain sections of media that the said concessional tax rate of 5% has been withdrawn.
“It is hereby clarified that there is no change in the said proviso even after amendment of section 115AD vide Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 and the concessional rate of tax of 5% shall continue to be applicable for interest income referred to in section 194LD of the Act,” the CBDT in the press release announced.
