In a bid to soothe the nerves of foreign portfolio investors spooked by a fresh tax burden on indirect transfers mooted by the Central Board of Direct Taxes last month, the Finance Ministry on Tuesday put the tax department missive in abeyance until further notice. The tax department circular issued on December 21 clarified that all foreign portfolio investors (FPIs) with more than 50% of their assets in India and owning over 5 % stake in any listed entities would incur tax under India’s indirect transfer provisions. “The stakeholders have presented their concerns stating that the circular does not address the issue of possible multiple taxation of the same income. The interpretation of the law canvassed by the circular was giving rise to unreasonable and unacceptable outcomes for foreign funds and global investors.”The CBDT circular had created widespread concern among the FPI community, said Suresh Swamy, Partner – Financial Services Tax at PwC. FPIs have been net sellers at Rs.

Source: The Hindu January 18, 2017 00:31 UTC