Thin capitalisation is on the way to India
September 08, 2009
India’s proposed new direct taxes code has provisions in the fine print that propose the introduction of thin-capitalisation rules
As is the case with most jurisdictions, a typical thin-capitalisation regulation places a cap on the gearing ratio in the capital structure of a company and any debt more than that is treated as equity whereby the corresponding interest expense is not allowed as a tax deductible expense. Though the capital gearing ratio may be differently prescribed for different sets of industries, stage of project cycle, type of investment and so on, a range of 2:1 to 3:1 is often observed.
The rest of this article is available to subscribers only. Subscribe today for full access to this article.
This article is not available to current free trialists.
If you are already a paid subscriber, please log in below to access the rest of this article.