Section 194LC - Income by way of interest from long term bonds and loans from Indian companies - Income Tax - Ready Reckoner - Income Tax

Section 194LC - Income by way of interest from long term bonds and loans from Indian companies - This provision of section applicable with effect from 01.07.2012. Applicability Where any income by way of interest referred to in section 194LC(2) is payable to a non-resident, not being a company or to a foreign company by a specified company or a business trust, the person responsible for making the payment. The purpose of eligibility under the section 194LC , shall be as approved by the Central Government. Approval of loan agreements/ long term infrastructure bonds and rate of interest for the purpose of Section 194LC of the Income-tax Act, 1961 [ Circular no. 7/2012 dated 21.09.2012 ] Time of Tax deduction Tax shall be deducted at the time of credit of such income to the account of payee or at payment in cash or cheque or by any other mode, whichever is earlier Rate of TDS The income by way of interest payable by the Indian company or the business trust to a foreign company or non corporate Non-resident would be subject to tax at a concessional rate @5% on Gross interest (a) in respect of monies borrowed by it in foreign currency from a source outside India,- (a) under a loan agreement at any time on or after 1-7-2012 but before 1-7-2023 (extended) or (b) by way of issue of long-term infrastructure bonds at any time on or after 1-7-2012 but before 1-10-2014, or (c) by way of issue of any long-term bond including long-term infrastructure bond at any time on or after 1-10-2014 but before 1-7-2023 (extended) as approved by the Central Government in this behalf, and (b) in respect of monies borrowed by it from a source outside India by way of issue of rupee denominated bond before the 1-7-2023 (extended) , and [ Inserted by FA, 2017 , w.e.f. 1-4-2016] Tax is deductible rate of 4% in respect of monies borrowed by it from a source outside India by way of issue of any long term bond or rupee denominated bond on or after the 1-7-20 but before 1-7-23 which is listed in recognised stock exchange located in any International Financial Services Centre, or Tax is deductible rate of 9% i n respect of money borrowed by it from a source outside India by way of issuance of any long-term bond or rupee denominated bond on or after the 1st day of July, 2023, which is listed only on a recognised stock exchange located in an International Financial Services Centre [ Inserted by FA, 2023 , w.e.f. 01-04-2023 ]; The extent to which such interest does not exceed the amount of interest calculated at the rate approved by the Central Government in this behalf, having regard to the terms of the loan or the bond and its repayment. Non-Applicability of higher rate of TDS u/s 206AA for non furnishing of PAN [ Section 206AA(7) Read with Rule 37BC ] Any person entitled to receive any sum or income or amount, on which tax is deductible under Chapter XVIIB shall furnish his Permanent Account Number to the person responsible for deducting such tax, failing which tax shall be deducted at the higher of the following rates, namely:- (i) at the rate specified in the relevant provision of this Act; or (ii) at the rate or rates in force; or (iii) at the rate of 20%. For the purpose of reducing the compliance burden, Rule 37BC provide relaxation to a non-corporate non-resident or foreign company not having PAN in respect of payment in the nature of interest, royalty, fees for technical services, dividend and payments on transfer of any capital asset, if the deductee furnishes the details and the documents specified in Rule 37BC(2) to the deductor.