Rule 10CB provides the rate of interest at which interest has to be calculated on excess money or part thereof that is not repatriated within the time limit. Where the international transaction is denominated in Indian rupees, the rate of interest will be the one-year marginal cost of fund lending rate of the State Bank of India as of 1st April of the relevant previous year, plus 325 basis points (plus 3.25%). Where the international transaction is denominated in foreign currency, the rate of interest shall be the six-month London Interbank Offered Rate (LIBOR) as of 30th September of the relevant previous year plus 300 basis points (plus 3%).
It is possible that the amount of imputed interest income on the excess money not repatriated to India may relate to more than one year. Having regard to Rule 10CB, the interest liability extends till the date of repatriation. Accordingly, for the relevant year under audit, such liability in respect of imputed interest may extend not only to the primary adjustment but may also relate to the primary adjustment made in the earlier years.