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Under the Income-tax Rules, 2026, for tax year 2026–27, at what annual rate is interest imputed on excess money not repatriated after a secondary adjustment, where the international transaction is…

Question and options

Under the Income-tax Rules, 2026, for tax year 2026–27, at what annual rate is interest imputed on excess money not repatriated after a secondary adjustment, where the international transaction is denominated in Indian rupees?

  1. The reference rate for the relevant foreign currency on 30 September plus 325 basis points

  2. SBI’s one-year marginal cost of fund lending rate on 1 April plus 300 basis points

  3. SBI’s one-year marginal cost of fund lending rate on 1 April plus 325 basis points

  4. SBI’s one-year marginal cost of fund lending rate on 30 September plus 325 basis points

Answer and explanation

Correct answer: C - SBI’s one-year marginal cost of fund lending rate on 1 April plus 325 basis points

Rule 83 of the Income-tax Rules, 2026, made for section 170(4) of the Income-tax Act, 2025, fixes the rate for a rupee-denominated transaction at the State Bank of India’s one-year marginal cost of fund lending rate as on 1 April of the relevant tax year plus 325 basis points. The 30 September date and the 300-basis-point margin belong to the foreign-currency rule, which uses the currency’s reference rate.

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