Emerging Markets Rates and Currencies Handbook

57 Citi | Emerging Markets Currencies Handbook 2021 India Item Inter-Co Debt Offshore Bank Loans Offshore Local Borrowing Derivatives Equity W/H Tax 20% WHT • Under certain tax treaties typically 10%, with further reduction possible on country-by-country basis 5% WHT on FCY borrowed via a loan agreement 10% WHT For Non-residents — WHT on gains on derivatives will attract 40% tax For residents — nil WHT Dividend distribution tax replaced (April 2020) by WHT of 10% for residents and 20% for non-residents Under certain tax treaties typically 10%, with further reduction possible on country-by- country basis For Non-residents — Gains on equity will also be subject to tax. The rate depends on multiple criteria i.e. residency, on market/ off market, period of holding etc. Deductibility of interests Cap on interest deduction to 30% of company’s EBITDA Excess interest expenditure disallowed in that year can be carried forward for eight years and would be available for set-off Fully deductible Any interest paid by a taxpayer on capital borrowed for the purposes of the taxpayer’s business or profession is tax-deductible without any limit N/A N/A Deductibility of FX losses Fully deductible, if it is in the nature of business income Other taxes, duties N/A N/A N/A N/A N/A Comments N/A N/A N/A N/A N/A Note: Citigroup Inc. and any of its affiliates do not provide accounting, tax, or legal advice. Please seek advice from a relevant licensed advisor. Source: Relevant legislation, publicly available sources. Subsidiary Funding — Tax Consideration Tax Summary — India