The government Monday exempted from income tax the interest payable on rupee denominated bonds issued outside India by a company or a trust to a non-resident or a foreign company, a move aimed at increasing dollar inflow. The interest would be exempt on rupee denominated bond issued outside India during the period from September 17, 2018, to March 31, 2019, the Finance Ministry said in a statement.

As per I-T law, interest payable by an Indian company or a business trust to a non-resident, including a foreign company, on rupee denominated bond issued outside India before the July 1, 2020, was liable for concessional rate of tax of 5 per cent. Consequent to Prime Minister Narendra Modi reviewing the state of economy last week, the government had announced a multi-pronged strategy to contain the current account deficit (CAD) and augment the foreign exchange inflow.