The government has refused to budge on the FII tax issue, it seems. Recently, the tax department had started to issue notices for Minimum Alternate Tax (MAT) on gains made by foreign institutions ( Read our post ) after an Advance Ruling by the tax department that capital gains made by such investors, regardless of the tax treaty with Mauritius, is subject to MAT. MAT is applied so that people who use loopholes to avoid taxes will still pay at least a certain minimum tax amount. It’s only for companies though. Till now, companies didn’t include non-Indian companies (those who don’t have a base in India). But some ruling established that an FII – a foreign based institution that invests in Indian stocks – is taxable in India, even on capital gains on shares. Such gains are otherwise untaxable because the Mauritius/Singapore treaties don’t allow them to be taxed in India, but the MAT concept is that if you don’t pay tax because of a loophole, you pay MAT.… (Read On…)
[via Capital Mind]
Follow us @investmentheat – lists / @sectorheat