India cuts withholding tax on Overseas Loans

India’s government Friday approved a large tax cut on overseas loans taken by local companies, shrugging off mounting political protests and choosing to continue with growth-supportive steps which have boosted investor sentiment and catapulted local stocks to their highest level in 14 months.

The tax rate on the interest paid to overseas lenders by local companies has been reduced to 5% from the earlier 20%

The tax cut will start with retrospective effect from July 2012 and run to June 2015. It will apply to overseas loans and long-term infrastructure bonds