Undaunted: Saving the Idea of India by P. Chidambaram

Author:P. Chidambaram [Chidambaram, P.]
Language: eng
Format: epub
Publisher: Rupa Publications India
Published: 2019-02-07T18:30:00+00:00

4. Exemption from withholding tax for issuance of Masala Bond issues done in FY 2018–19 and removal of restrictions on Indian banks’ market-making in Masala Bonds including restrictions on underwriting of such bonds

This is a purely temporary measure (valid until 31 March 2019) to support corporates in raising foreign loans denominated in Indian currency. If withholding tax is removed, the immediate return to the lender will be higher, but his tax liability, if any, will remain the same. It is, therefore, a small factor. In Masala Bonds, since the exchange rate risk is with the lender, the key factors are the comparative yield and the exchange rate. If those two factors are uncertain or problematic, no big change in the rate of inflows may be expected.

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