BY TII News Service

NEW DELHI, FEB 01, 2020: THE Union Minister for Finance, Ms Nirmala Sitharaman, today presented the Union Budget before the Parliament. The minister announced that measures were being taken to increase the lure of the Indian equity market and to provide relief to a large swathe of investors, so as to make India a more attractive destination for investment. In this regard, the Minister proposed to do away with the Dividend Distribution Tax (DDT). She further mentioned that the dividend would be taxed only in the hands of the recipients at the applicable tax rates.

Importantly, in a bid to incentivize the investment by the Sovereign Wealth Fund of foreign Governments in the priority sectors, Union Budget proposed to grant 100% tax exemption to interest, dividend and capital gains income in respect of investment made in infrastructure  and other notified sectors  before March 31, 2024 and with minimum lock-in period of 3 years. In order to make available foreign funds at a lower cost, it has been proposed to extend the period of concessional withholding rate of 5% under section 194LC for interest payment by non-residents in respect of moneys borrowed and bonds issued up to June 30, 2023.

The Union Budget also proposed to extend the period up to 30th June, 2023 for lower rate of withholding of 5% under section 194LD for interest payment to Foreign Portfolio Investors (FPIs), Qualified Foreign Investors (QFIs) in respect of bonds issued by Indian companies and government securities. Union Budget further proposed to extend concessional rate of withholding of 5% under section 194LD to the interest payment made on the Municipal Bonds.