MUMBAI, July 31: The Reserve Bank of India (RBI) on Monday directed all scheduled commercial banks to pass on the benefit arising out of interest tax reduction to all corporates "irrespective of the category of borrowers and types of advances".

The RBI move assumes significance as the banks have not been doing so despite the reduction of interest tax by one percentage point - from 3 per cent to 2 per cent.

In terms of the notification issued by the government of India in the Gazette of India on May 14, 1997, the levy of interest tax on the interest income of the lending institutions has been reduced from 3 per cent to 2 per cent in respect of any chargeable interest accruing or arising after March 31.

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