The 2017 budget includes a proposal to limit the deductibility of interest payments on loans granted or deemed granted by certain related parties, broadly based on BEPS action 4 recommendations.
One of the measures in India’s 2017 budget, announced by the finance minister on 1 February 2017, is a proposal that would limit the deductibility of interest payments based on the OECD’s recommendations under action 4 of the BEPS project. The proposal, which is designed to prevent the erosion of India’s tax base through the use of related party interest expense, would apply to interest accrued as from 1 April 2017. It is noteworthy that India currently does not have thin capitalization rules, although there are special rules that disallow deductions for interest on borrowings used to make investments that generate exempt income.
Source & more info: Deloitte