Amendment of section 115A
35. In section 115A of the Income-tax Act, in sub-section (1), in clause (a), with effect from the 1st day of April, 2015,––
(I) after sub-clause (iiab), the following sub-clause shall be inserted, namely:––
“(iiac) distributed income being interest referred to in sub-section (2) of section 194LBA;”;
(II) in item (BA), after the word, brackets, figures and letters “sub-clause (iiab)”, the words, brackets, figures and letters “or sub-clause (iiac)” shall be inserted;
(III) in item (D), after the word, brackets, figures and letters “sub-clause (iiab)”, the word, brackets, figures and letters “, sub-clause (iiac)” shall be inserted.
Notes on Clauses:
Clause 35 of the Bill seeks to amend section 115A of the Income-tax Act, relating to tax on dividends, royalty and technical service fees in the case of foreign companies.
The existing provisions of sub-section (1) of section 115A provide the rates at which income-tax shall be payable, where a total income of non-resident (not being a company) or a foreign company, includes any income by way of dividends (other than dividends referred to in section 115-O); or interest received from Government or an Indian concern or monies borrowed or debt incurred by the Government or the Indian concern in foreign currency; or interest received from an infrastructure debt fund referred to in clause (47) of section 10; or income received in respect of units, purchased in foreign currency, of a Mutual Fund specified under clause (23D) of section 10 or the Unit Trust of India.
It is proposed to amend clause (a) of sub-section (1) of section 115A to insert a new sub-clause (iiac) so as to provide that where the total income of a non-resident (not being a company) or a foreign company includes distributed income being interest referred to in sub-section (2) of section194LBA such income shall be taxable at the rate of five per cent.
It is further proposed to make consequential amendments in item (BA) and item (D) of clause (a) of sub-section (1) of section 115A.
These amendments will take effect from 1st April, 2015 and will, accordingly, apply in relation to the assessment year 2015- 16 and subsequent years.
