Withholding Tax

With capital outflows eroding India’s foreign exchange reserves by nearly $38 billion since March this year amid the West Asia conflict, the government is reportedly considering slashing the ‘withholding tax’ rate from 20% to the earlier 5% as it looks to revive overseas inflows.

• It is a tax collected at the source of income.
• Instead of waiting for an investor or foreign company to pay taxes at the end of the financial year, the government requires the payer to deduct a portion of the income before it is remitted to the recipient.
• The deducted amount is then directly ....