No fear of FDI fall |
Investors must pay taxes on money they earn in India and the domestic economy is now strong enough to depend on any “tax-incentivised route” to attract foreign investments. India`s Finance Minister Arun Jaitley said there was no “serious apprehension” of investors shifting base to other tax havens and he sees no depletion in FDI flows due to re-drawing of decades-old tax treaty with Mauritius. The amendment would also help check round-tripping of funds and boost the domestic consumption, Jaitley added. After toiling for almost a decade to redraw the tax treaty with Mauritius, India will begin imposing capital gains tax on investments in shares through Mauritius next April onwards. As markets reacted cautiously to India expanding its crackdown on tax treaties to make it harder for investors to use tax havens as a shelter to avoid levies, Jaitley said that eventually, markets have to operate on inherent strength of (Indian) economy.Minister of State for Finance Jayant Sinha said the treaty revision will bring in lot of transparency about Mauritius-based entities investing in India.It will help us dramatically in curbing round-tripping because there are two very important aspects to it. One is the capital gains regime… that will be applicable at the same rate as you would get if you were a domestic resident tax payer in India.
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