§ 44. Sir J. Mellorasked the Secretary of State for India whether his attention has been called to the imposition for the first time of Income Tax by the Government of India on interest due to holders in the United Kingdom of certain Indian Port Trust loans; whether any change of financial policy is involved; and whether he will make a statement?
§ The Secretary of State for India (Mr. Amery)Yes, Sir. Under the Indian Income-tax (Amendment) Act, 1939, certain Indian concerns, including Port Trusts, are required by the Indian revenue authorities to deduct Indian Income Tax from interest payable in the United Kingdom on their issues of sterling debentures. The Government of India are advised that the validity of the relevant provisions of 1160 the Indian law is not open to question, and that the provisions can therefore be enforced in that country. They appreciate, however, that hardship would be caused by the enforcement of the law in the case of loans issued before the publication of the amending Bill made known the intention to legislate. They are, therefore, issuing orders that the deduction of Indian Income Tax at the source is to be waived in those cases of sterling loans issued for public subscription before 1st April, 1938, where the investor is entitled under United Kingdom law to be paid without such a deduction.