Interest

Aspects covered under this Chapter: –
• Taxation of Interest under the Domestic Tax laws in India;
• Scope of definition of Interest in select International tax Treaties, vis a vis the domestic tax laws;
• When is interest said to accrue of arise in India ?
• Concessional treatment of taxation of Interest in Source state;
• Computation of tax on gross or net basis ?

Scope of definition of Interest in select International tax Treaties, vis a vis the domestic tax laws;


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Under the Indian Domestic tax laws, definition of interest is provided in Section 2(28A) as under : –

interest” means interest payable in any manner in respect of any moneys borrowed or debt incurred (including a deposit, claim or other similar right or obligation) and includes any service fee or other charge in respect of the moneys borrowed or debt incurred or in respect of any credit facility which has not been utilized”

Section 2(28B) of the Income Tax Act, 1961 also defines interest on securities to mean –

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