Budget 2012: Highlights - Tax Deductable At Source (TDS)

Tax Rate And TDS On Payment Of Interest On ECB

Sec. 115A(1)(a)(iiaa) and Sec. 194LC:

By insertion of this sub-clause, the payment of interest as specified in new Sec. 194LC has been made taxable at the rate of 5% with effect from 1st July, 2012.

The new Sec. 194LC provides that on payment by specified companies to non-resident of interest on External Commercial Borrowing (ECB), tax shall be deducted at source at the rate of 5%.

Specified company includes Indian Companies engaged in:

(i) generation or distribution or transmission of power; or

(ii) operation of aircraft; or

(iii) manufacture or production of fertilizers; or

(iv) construction of road including toll road or bridge; or