Budget 2020

Budget 2020 | Government moots cut in withholding tax

With an aim to boost listing of bonds at IFSC exchange, the government has proposed to reduce the withholding tax rate to 4% from 5% on interest payment on bonds listed on the bourse.

The move will attract more international investors to IFSC exchange.

“In order to incentivise listing of bonds at IFSC exchange, I propose to further reduce the withholding rate from 5% to 4% on interest payment on the bonds listed on its exchange,” Finance Minister Nirmala Sitharaman Sitharaman said in her Budget speech.

India International Exchange (India INX) MD and CEO V. Balasubramaniam said the Budget announcement will be “an immense boost to all issuers and immensely help them in attracting more international investors.” Withholding tax is levied by countries on interest or dividends paid to a person who is resident outside that country. India INX has already listed medium-term note (debt) programme worth $47 billion (about ₹3.33 lakh crore) with drawdown of $18.5 billion till date.

Watch | Highlights of Union Budget 2020-21

“This announcement should greatly incentivise issuers to choose India INX as the preferred platform for listing their international bonds and masala bonds,” he added. India‘s only International Financial Services Centre (IFSC) is in GIFT City, near Ahmedabad in Gujarat.

GIFT City is a global financial and IT services hub, a first-of-its-kind in India, designed to be at par with globally benchmarked business districts. It is supported by state-of-the-art infrastructure encompassing all basic urban infrastructure elements along with an excellent external connectivity.

Companies from financial services, technology and all other services sector are targeted as potential occupants within the city.

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Printable version | Jan 16, 2021 9:41:53 AM | https://www.thehindu.com/business/budget/budget-2020-government-moots-cut-in-withholding-tax/article30715795.ece

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