Income Tax Act, 1961
Section 9: Ins. by Act 11 of 1983, s. 5 (w.e.f. 11983).
9. Ins. by Act 11 of 1983, s. 5 (w.e.f. 11983).
10. Subs. by Act 5 of 1964, s. 6, for “in any case where the loan or debt is approved by the Central Government, having
regard to its terms generally and in particular to the terms of its repayment” (w.e.f. 11964).
11. Explanation renumbered as Explanation 1 thereof by Act 54 of 2003, s. 2 (w.e.f. 11962).
79
1[Explanation 2.—For the removal of doubts, it is hereby declared that the usance interest payable
outside India by an undertaking engaged in the business of ship-breaking in respect of purchase of a
ship from outside India shall be deemed to be the interest payable on a debt incurred in a foreign
country in respect of the purchase outside India;]
2[(d) by the Industrial Finance Corporation of India established by the Industrial Finance
Corporation Act, 1948 (15 of 1948), or the Industrial Development Bank of India established
under the Industrial Development Bank of India Act, 1964 (18 of 1964), 3[or the Export-Import
Bank of India established under the Export-Import Bank of India Act, 1981 (28 of 1981),] 4[or the
National Housing Bank established under section 3 of the National Housing Bank Act, 1987 (53
of 1987),] 5[or the Small Industries Development Bank of India established under section 3 of the
Small Industries Development Bank of India Act, 1989 (39 of 1989),] or the Industrial Credit and
Investment Corporation of India [a company formed and registered under the Indian Companies
Act, 1913 (7 of 1913)], on 6[any moneys borrowed by it from sources outside Indiabefore the 1st
day of June, 2001], to the extent to which such interest does not exceed the amount of interest
calculated at the rate approved by the Central Government in this behalf, having regard to the
terms of the loan and its repayment;]
(e) by any other financial institution established in India or a banking company to which the
Banking Regulation Act, 1949 (10 of 1949), applies (including any bank or banking institution
referred to in section 51 of that Act), on 6[any moneys borrowed by it from sources outside India
before the 1st day of June, 2001] under a loan agreement approved by the Central Government
where the moneys are borrowed either for the purpose of advancing loans to industrial
undertakings in India for purchase outside India of raw materials or capital plant and machinery
or for the purpose of importing any goods which the Central Government may consider necessary
to import in the public interest, to the extent to which such interest does not exceed the amount of
interest calculated at the rate approved by the Central Government in this behalf, having regard to
the terms of the loan and its repayment;]
7[(f) by an industrial undertaking in India on any moneys borrowed by it in foreign currency
from sources outside India under 8[a loan agreement approved by the Central Government before
the 1st day of June, 2001] having regard to the need for industrial development in India, to the
extent to which such interest does not exceed the amount of interest calculated at the rate
approved by the Central Government in this behalf, having regard to the terms of the loan and its
repayment;
9[(fa) by a scheduled bank 10*** 11[to a non-resident or to a person who is not ordinarily
resident within the meaning of sub-section (6) of section 6] on deposits in foreign currency where
the acceptance of such deposits by the bank is approved by the Reserve Bank of India.
12[Explanation.—For the purposes of this item, the expression “scheduled bank” means the State
Bank of India constituted under the State Bank of India Act, 1955 (23 of 1955), a subsidiary bank as
defined in the State Bank of India (Subsidiary Banks) Act, 1959 (38 of 1959), a corresponding new
bank constituted under section 3 of the Banking Companies (Acquisition and Transfer of
Undertakings) Act, 1970 (5 of 1970), or under section 3 of the Banking Companies (Acquisition and
Transfer of Undertakings) Act, 1980 (40 of 1980), or any other bank being a bank included in the
Second Schedule to the Reserve Bank of India Act, 1934 (2 of 1934), but does not include a
co-operative bank;
by the Industrial Finance Corporation of India established by the Industrial Finance
Corporation Act, 1948 (15 of 1948), or the Industrial Development Bank of India established
under the Industrial Development Bank of India Act, 1964 (18 of 1964), 3[or the Export-Import
Bank of India established under the Export-Import Bank of India Act, 1981 (28 of 1981),] 4[or the
National Housing Bank established under section 3 of the National Housing Bank Act, 1987 (53
of 1987),] 5[or the Small Industries Development Bank of India established under section 3 of the
Small Industries Development Bank of India Act, 1989 (39 of 1989),] or the Industrial Credit and
Investment Corporation of India [a company formed and registered under the Indian Companies
Act, 1913 (7 of 1913)], on 6[any moneys borrowed by it from sources outside Indiabefore the 1st
day of June, 2001], to the extent to which such interest does not exceed the amount of interest
calculated at the rate approved by the Central Government in this behalf, having regard to the
terms of the loan and its repayment;]
by any other financial institution established in India or a banking company to which the
Banking Regulation Act, 1949 (10 of 1949), applies (including any bank or banking institution
referred to in section 51 of that Act), on 6[any moneys borrowed by it from sources outside India
before the 1st day of June, 2001] under a loan agreement approved by the Central Government
where the moneys are borrowed either for the purpose of advancing loans to industrial
undertakings in India for purchase outside India of raw materials or capital plant and machinery
or for the purpose of importing any goods which the Central Government may consider necessary
to import in the public interest, to the extent to which such interest does not exceed the amount of
interest calculated at the rate approved by the Central Government in this behalf, having regard to
the terms of the loan and its repayment;]
7[
by an industrial undertaking in India on any moneys borrowed by it in foreign currency
from sources outside India under 8[a loan agreement approved by the Central Government before
the 1st day of June, 2001] having regard to the need for industrial development in India, to the
extent to which such interest does not exceed the amount of interest calculated at the rate
approved by the Central Government in this behalf, having regard to the terms of the loan and its
repayment;
9[
by a scheduled bank 10*** 11[to a non-resident or to a person who is not ordinarily
resident within the meaning of sub-section
of section 6] on deposits in foreign currency where
the acceptance of such deposits by the bank is approved by the Reserve Bank of India.
12[Explanation.—For the purposes of this item, the expression “scheduled bank” means the State
Bank of India constituted under the State Bank of India Act, 1955 (23 of 1955), a subsidiary bank as
defined in the State Bank of India (Subsidiary Banks) Act, 1959 (38 of 1959), a corresponding new
bank constituted under section 3 of the Banking Companies (Acquisition and Transfer of
Undertakings) Act, 1970 (5 of 1970), or under section 3 of the Banking Companies (Acquisition and
Transfer of Undertakings) Act, 1980 (40 of 1980), or any other bank being a bank included in the
Second Schedule to the Reserve Bank of India Act, 1934 (2 of 1934), but does not include a
co-operative bank;