Debt investors face a tax maze in India

While debt is an important source of funds for the Indian economy, investors - especially foreign investors - have to navigate through various complexities associated with taxation of debt investment

With a lower than estimated rate of growth of gross domestic product, and the economy in the midst of a downturn, the Union Budget due to be presented on February 1 is an important juncture in India’s vision of becoming a $5 trillion economy by 2024-25.
 
While debt is an important source of funds for the Indian economy, investors — especially foreign investors — have to navigate through various complexities associated with the taxation of debt investments.
 
Multiple tax rates
 
First, the applicable tax rates. Depending on the type of instrument and the route under which investment