Govt to apply 5% withholding tax to offshore rupee bonds

Clarification comes amid confusion about whether withholding tax applies to offshore debt

The government will apply a 5% withholding tax to offshore rupee bonds for foreign investors, in line with the rate applied to domestic debt, Manoj Joshi, joint secretary at the finance ministry, told reporters on Tuesday.

The clarification comes amid some confusion about whether the withholding tax also applied to offshore debt.

India had cut the tax for debt investments to the current rate from 20% in 2013, which will remain in effect until July 2017.