With capital outflows eroding India’s foreign exchange reserves by nearly $38 billion since March this year amid the West Asia conflict, the government is reportedly considering slashing the ‘withholding tax’ rate from 20% to the earlier 5% as it looks to revive overseas inflows. Withholding tax, akin to a tax deducted at source, is paid by foreign investors on the interest they earn on their holding of Indian bonds. A high withholding tax is seen as a major deterrent for foreign capital inflows at a time when India is grappling with rising external pressures, including a sharp surge in crude oil prices. The move assumes significance as the government has already proposed several measures to curb outflows and manage the external account, including cuts in expenditure and restrictions on foreign travel, gold imports and other non-essential spending.…