The government is expected to maintain a status quo on the withholding tax for foreign portfolio investors (FPIs) on the interest they earn on rupee-denominated bonds, currently at 5 per cent, going into the next financial year.
An amendment last year through Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 had inadvertently deleted the special provision for the concessional withholding rate for FPIs on the interest they earn on rupee-denominated bonds issued by Indian firms and government securities. The Central Board of Direct Taxes (CBDT), however, is expected to rectify the same either in the Finance Bill or the I-T Act, said people in the know.