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Govt reintroduces clause on 5% withholding tax for FPIs

Govt reintroduces clause on 5% withholding tax for FPIs

The Finance Ministry has reintroduced the clause in the Income tax act that provided for preferential 5% withholding tax applicable to foreign portfolio investors (FPIs). As a part of amendments to the Finance Bill 2021 introduced in Lok Sabha on 22 March, the government has put back the deleted clause of Section 151 which referred to the five per cent withholding tax rate for FPIs in case of interest earned from debt securities.

ET reported last week that the potential withholding tax on offshore funds could shoot up to as much as 20% after a provision in Section 151 of the Income Tax Act was deleted while government was making changes to the Income Tax Act

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