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Proposed Tax Code to Affect Investment in India

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Proposed Tax Code to Affect Investment in India

by CFO Innovation Staff, 25 March 2010
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Accounting and Regulations Tax
tags:
capital gains tax double tax treaty foreign funds tax haven
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India's lawmakers plan to introduce a new tax code next year that could change Mauritius' status as a tax haven for foreign funds investing in India, reports the Wall Street Journal.

 

The Journal says the bill would affect investments coming into India as currently 80% to 90% of foreign investment into the country flows through Mauritius.

 

The newspaper explains that under the current double taxation treaty, capital gains on Indian shares that are held by a Mauritian company aren't subject to Indian tax. Mauritian companies are simply taxed according to Mauritius tax laws, which are extremely favorable.

 

However, hoping to raise more tax revenue from the financial services sector, Indian legislators have drafted a bill that could override current tax treaties that exclude investment firms from paying a capital-gains tax, says the Journal, adding another proposal is a flat tax rate of 30% on capital gains. 
 

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Tax Plans Could Hit India Investors
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