Withholding tax waiver, payment in gilts to smooth Iran oil flow to India

In order to enable rupee payments to Iran for crude oil, the Indian finance ministry is likely to give some incentives to suppliers from the West Asian country. As per the plan, these payments will be exempt from withholding tax. This means while making payments to Iranian crude oil suppliers, Indian refiners will not have to deduct taxes. Additionally, the Reserve Bank of India is working on ways to convert outstanding payments by India for Iran oil into debt, allowing Iran to hold Indian government securities instead.Currently, any payments made by an Indian company to a non-resident corporation is subject to a withholding tax of 40% of net income. The sum is deducted by the taxpayer in India, but the burden of which falls on the non-resident.

Source: Financial Express