Business

Withholding tax on FPI debt return may surge to 20%

NEW DELHI, MAR 17 (IANS) | Publish Date: 3/17/2021 1:37:34 PM IST

Experts have pointed out that the provision providing for concessional income tax rate of 5 per cent on debt return for foreign portfolio investors (FPIs) has been inadvertently omitted.

Sunil Badala, Partner and Head (financial services, tax) at KPMG in India, said the government had in September 2020 amended Section 115AD of Income Tax Act to accord a concessional income tax rate of 10 per cent on specified income to funds set up in the International Financial Services Centre (IFSC).

“While amending Section 115AD, it seems that the provision providing for concessional income tax rate of 5 per cent on specified interest to foreign portfolio investors (FPIs) has been inadvertently omitted,” Badala said.

The error will impact at least 4,000 international funds.

 

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