The Central Government has notified vide Notification No. G.S.R. 89 (E) dated 15.2.2008 a scheme entitled “Issue of Foreign Currency Exchangeable Bonds Scheme, 2008”. As per this Scheme, this Bond would be expressed in foreign currency, the principal interest in respect of which is payable in foreign currency issued by an Issuing Company and subscribed to by a person who is a resident outside India in foreign currency and exchangeable into equity share of another Company, to be called the offered Company, in any manner, either wholly, or partly or on the basis of any equity related warrants attached to debt instruments. The “Issuing Company” would mean an Indian Company which is eligible to issue Foreign Currency Exchangeable Bond. “Offered Company” would mean an Indian company whose equity share I shares would be offered in exchange of the Foreign Currency Exchangeable Bond (FCEB). As per this Scheme interest payment on the Bonds until the exchange option is exercised would be subject to TDS as per Section 11 5AC (I). Exchange of Foreign Currency Exchangeable Bonds into shares would not give rise to any capital gains liable to tax in India. Likewise, it is provided that transfer of foreign currency exchangeable Bonds outside India by an investor who is a person resident outside India to another investor who is also a person resident outside India would not give rise to any capital gains liable to tax in India |
