FIIs Unlikely To Abandon India Due To Tax Treaty

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A report has said that FIIs are unlikely to abandon India due to the tax treaty revision with Mauritius and foreign investment flow can actually increase for a few months as investors may take tax advantage by investing more before March 31, 2017 deadline.

FIIs Unlikely To Abandon India Due To Tax Treaty
Commenting on the issue, a Centrum Wealth Research Official told the media, "FIIs are unlikely to abandon India and its great long- term buys just because of a new clause added to the DTAA (with Mauritius).

Worries on the same clause being added to the treaty with Singapore or other tax-havens are also not a big concern," a PTI report quating the Centrum Wealth Report has said.

"It is the pedigree of the company rather than tax structure of the home country which makes a business a strong investment proposition," he added.

As per reports, Mauritius and Singapore are among the top-most sources of foreign direct investments into India and together also account for a big chunk of total inflows into the country's capital markets. Nothing to worry

"It does not seem like the Indian equity market has much to worry about. There is enough time for the new rules to come into play. By then the development is likely to be well absorbed and market participants, both global and domestic, would be better prepared to deal with life after April 1, 2017.

"The changes to the treaty are definitely a step in the right direction and should do more good than harm," it said.

Nothing to worry

"It does not seem like the Indian equity market has much to worry about. There is enough time for the new rules to come into play. By then the development is likely to be well absorbed and market participants, both global and domestic, would be better prepared to deal with life after April 1, 2017.

"The changes to the treaty are definitely a step in the right direction and should do more good than harm," it said.

Read more about: fiis, tax treaty
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