In section 115A of the Income-tax Act, with effect from the 1st day of July, 2012, in sub-section (1), in clause (a),
(a) in sub-clause (ii), for the word, brackets, figures and letter "clause (iia)", the words, brackets, figures and letters "sub-clause (iia) or sub-clause (iiaa)" shall be substituted ;
(b) after sub-clause (iia), the following sub-clause shall be inserted, namely :
"(iiaa) interest of the nature and extent referred to in section 194LC ; or" ;
(c) in item (BA), after the word, brackets, figures and letter "sub-clause (iia)", the words, brackets, figures and letters "or sub-clause (iiaa)" shall be inserted ;
(d) in item (D), after the word, brackets, figures and letter "sub-clause (iia)", the word, brackets, figures and letters ", sub-clause (iiaa)" shall be inserted.
Clause 42 of the Bill seeks to amend section 115A of the Income-tax Act, relating to tax on dividends, royalty and technical service fees in the case of foreign companies.
The existing provisions of sub-section (1) of the aforesaid section 115A provides the rates at which income-tax shall be payable, where a total income of non-resident (not being a company) or a foreign company, includes any income by way of dividends (other than dividends referred to in section 115-O) ; or interest received from Government or an Indian concern on monies borrowed or debt incurred by the Government or the Indian concern in foreign currency ; or interest received from an infrastructure debt fund referred to in clause (47) of section 10 ; or income received in respect of units, purchased in foreign currency, of a Mutual Fund specified under clause (23D) of section 10 of the Unit Trust of India.
It is proposed to amend clause (a) of the aforesaid sub-section to insert a new sub-clause (iiaa) so as to provide the rates at which income-tax shall be payable, where the total income of a non-resident (not being a company) or a foreign company includes income received from the interest of the nature and extent referred to in section 194LC. Such income from interest shall be taxable at the rate of five per cent. It is further proposed to make consequential amendments in aforesaid clause to make reference of the said sub-clause (iiaa).
This amendment will take effect from 1st July, 2012.
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