Concessional tax rate on GDRs

NEW DELHI, NOV. 20. The Government said today the global depository receipts (GDRs) issued to employees under foreign convertible bonds and ordinary shares will be eligible for concessional rate of taxation.

This was notified by the Central Board of Direct Taxes (CBTD) which said that GDRs issued to employees under the foreign currency convertible bonds and ordinary shares (through depository receipt mechanism) scheme 1993 would be eligible for concessional rate of taxation under Sec. 115 ACA of the Income- tax Act. The dividend received on such GSRs, other than dividends referred to in Sec. 115-0, would be taxed at the rate of 10 per cent.

Income earned by way of long-way capital gains on transfer of the GDRs would also be taxed at the rate of 10 per cent, an official release said here.

The concessional tax rate which up to assessment year 2000-01 was applicable in respect of income from GDRs issued to employees of companies engaged in information technology service has now been extended with respect to GDRs issued to employees of companies engaged in other knowledge based industry or service including entertainment service, pharmaceutical industry and biotechnology industry.

The concessional rate is now also applicable in respect of GDRs issued to employees of subsidiary companies.

The issue of foreign currency convertible bonds and ordinary shares (through depository receipt mechanism) scheme 1993 has been specified for the purposes of Sec. 115 ACA under delegated legislation to the Finance Act, 2001 in respect of assessment year 2000-01 and subsequent assessment years, the release added.

- PTI

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Section  : Business
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