Page 381 - DCOM301_INCOME_TAX_LAWS_I

Income Tax Laws – I

Notes (a) In the case of an individual or a Hindu Undivided family, interest on such Capital
Investment Bonds as the Central Government may, by notification in the Official
Gazette, specify.
(b) In the case of an individual or a Hindu Undivided family, interest on the notified
Relief Bonds.

(c) In the case of :
a non-resident Indian, being an individual owning the bonds; or
a nominee or survivor of the non-resident Indian; or

the donee, being an individual, to whom the bonds have been gifted by the
non-resident Indian, the interest received thereon shall be exempt if the bonds
are purchased by the non-resident Indian, in foreign exchange and the interest
and principal received thereon, whether on maturity or otherwise, is not
allowed to be taken out of India. The benefit does not cease even if the non-
resident Indian subsequently acquires the status of a resident. But, in the event
of premature encashment thereof, the benefit shall cease from the previous
year in which the encashment is made.
2. Interest on securities held by the Issue Department of the Central Bank of Ceylon constituted
under the Ceylon Monetary Law Act, 1949.
(a) Interest payable to any bank incorporated in a country outside India and authorised
to perform central banking functions in that country or any deposits made by it,
with the approval of the RBI, with any scheduled bank.
3. Other interests: These include:
(a) Interest payable by Government or a local authority on moneys borrowed by it
before June 1, 2001 from or debts owed by it to sources outside India.
(b) Interest payable by an industrial undertaking in India on moneys borrowed by it
before June 1, 2001 under a loan agreement entered into with such financial institution
in a foreign country as may be approved in this behalf by the Central Government
by general or special order.
(c) Interest payable by an industrial undertaking in India on any moneys borrowed or
debt incurred by it before June 1, 2001 in a foreign country in respect of purchase
outside India of raw materials or components or capital plant and machinery to the
extent to which such interest does not exceed the amount of interest calculated at the
rate approved by the Central Government in this behalf having regard to terms of
the loan or debt and its repayment. Purchase, includes Hire Purchase Agreement or
a lease agreement with an option to purchase such plant and machinery.
(d) Interest payable by the Industrial Finance Corporation of India or the IDBI or the
Industrial Credit and Investment Corporation of India or Export-Import Bank of
India, or the National Housing Bank or the Small Industries Development Bank of
India on any moneys borrowed before June 1, 2001 from sources outside India.
(e) Interest payable by any other financial institutions established in India or a banking
company on any moneys borrowed before June 1, 2001 from sources outside India
under an approved loan agreement.
(f) Interest at the rate approved by the Central Govt. payable by an industrial
undertaking in India on any moneys borrowed by it in foreign currency from sources
outside India under an approved loan agreement.

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