After getting relief from the government on minimum alternate tax ( MAT), the foreign portfolio investors ( FPIs) on Tuesday raised a number of taxation- related concerns with the finance ministry.
Nearly two dozen FPIs, in turn, were assured of simpler and transparent taxation regime, which would prompt them to set up a permanent establishment the country.
The meeting called ahead of the Budget by Economic Affairs Secretary Shaktikanta Das saw participation from various FPIs, including Citibank, Deutsche Bank, Fidelity, Goldman Sachs, CLSA, BlackRock and Bank of America, each giving views on sector related issues.
“A number of suggestions have come and they have to be looked into and will be placed in front of the government. The government will then take a decision. Tax issues were naturally raised... We discussed fund management industry in India,” Das said after the meeting.
The meeting was attended by top officials of the Reserve Bank of India, Securities and Exchange Board of India, and the Central Board of Direct Taxes as well.
The interaction that lasted close to three hours also saw discussions pertaining to simplification of procedures and documentations for FPI registration and development of fund management sector in India. The government also wanted to know from FPIs about the steps needed to encourage them to set up business in India.
“The whole intention was to basically understand the suggestions and difficulties... And try to resolve those issues and whatever issues can be immediately dealt with will be dealt with by the government,” said Das. He added some of the suggestions were very useful in the run- up to the Budget.
Sources said there were some remaining issues related to applicability of minimum alternate tax even after the clarification by the government last month. Apparently, the dispute resolution panel has been remitting the matter back to assessing officers to determine whether there is permanent establishment or now, prolonging the proceedings.
Neeraj Gambhir, managing director of Nomura Fixed Income Securities, said the issue of withholding tax of five per cent on corporate bonds was discussed at the meeting.
“The industry has been asking for a longer- term treatment on it. It’s five per cent; it’s due to expire in 2017. A lot of people are making long- term investment.
They need clarity on how long this is going to stay,” said Gambhir.
Besides, there were discussions on the way to deepen and enhance liquidity in the corporate bond market.
Since the beginning of the year, overseas investors have made a net investment of Rs.24,342 crore in equities, and Rs.53,091 crore in the debt market.
Business Standard, New Delhi, 21st Oct. 2015
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