FM for cutting withholding tax to boost listing of bonds at IFSC exchange

Topics Budget 2020 | IFSC | Budget Speech

Nirmala Sitharaman. Photo: ANI

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

The move will attract more international investors at IFSC exchange.

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

India International Exchange (India INX) MD and CEO V Balasubramaniam said that the budget announcement by the government to reduce the withholding tax from 5 per cent to 4 per cent for IFSC exchange listed bonds will be "an immense boost to all issuers and will 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) program worth USD 47 billion dollars (about Rs 3.33 lakh crore) with drawdown of USD 18.5 billion dollars till date.

"This announcement should greatly incentivise issuers to choose India INX as the preferred platform for listing their international bonds and masala bonds," he added.

The country's only International Financial Services Centre (IFSC) is in GIFT City near Ahmedabad in Gujarat.

GIFT City is an emerging 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.

Dear Reader,

Business Standard has always strived hard to provide up-to-date information and commentary on developments that are of interest to you and have wider political and economic implications for the country and the world. Your encouragement and constant feedback on how to improve our offering have only made our resolve and commitment to these ideals stronger. Even during these difficult times arising out of Covid-19, we continue to remain committed to keeping you informed and updated with credible news, authoritative views and incisive commentary on topical issues of relevance.

We, however, have a request.

As we battle the economic impact of the pandemic, we need your support even more, so that we can continue to offer you more quality content. Our subscription model has seen an encouraging response from many of you, who have subscribed to our online content. More subscription to our online content can only help us achieve the goals of offering you even better and more relevant content. We believe in free, fair and credible journalism. Your support through more subscriptions can help us practise the journalism to which we are committed.

Support quality journalism and subscribe to Business Standard.

Digital Editor

Business Standard is now on Telegram.
For insightful reports and views on business, markets, politics and other issues, subscribe to our official Telegram channel