New FPI Rules: Mauritius route tax exemption has not ended yet, tax department clarified

Mauritius-based FPIs: India and Mauritius have agreed on some modifications relating to tax exemptions. An enormous fall was seen out there after the information associated to that…

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The Government of India has issued a clarification relating to modifications within the tax exemption out there to Foreign Portfolio Investors (FPIs) coming by the Mauritius route. In the clarification issued by the Income Tax Department on Friday, it was stated that the modifications have not been applied but. This implies that FPIs taking Mauritius route will proceed to get the identical tax exemption advantages as earlier than.

Changes have not been notified but
The Income Tax Department on Friday issued a clarification relating to the current modifications within the Double Taxation Avoidance Agreement (DTAA) between India and Mauritius. He stated that the modifications have neither been ratified nor notified but.

The modifications will come into impact even after being notified beneath Section 90 of the Income Tax Act 1961. Until the protocols come into impact, considerations or objections about them are untimely.

Market sentiment spoiled by information
This clarification from the Income Tax Department has come when the market sentiment began deteriorating after the information of change in tax exemption out there to Mauritius primarily based FPIs. Selling was seen within the home inventory market on Friday after the information of abolition of tax exemption. Riding on the spectacular rally, the home market suffered a lack of greater than 1 p.c on Friday.

The inventory market fell a lot
On the final day of the buying and selling week ending April 12, BSE Sensex closed at 74,244.90 factors with a lack of 793.25 factors (1.06 p.c). A day earlier than that, the market had crossed the extent of 75 thousand factors for the primary time and achieved a brand new all-time excessive degree of 75,124.28 factors. On Friday, NSE’s Nifty 50 index fell 234.40 factors (1.03 p.c) to 22,519.40.

Agreement reached in early March
In truth, the governments of India and Mauritius have signed an settlement to enhance the Double Taxation Avoidance Agreement. An settlement on this regard was signed between the 2 nations on March 7, however information about it got here out on Wednesday. After that there was Eid vacation out there on Thursday. When the market opened on Friday after the vacations, the affect of the information was seen.

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