New Delhi, Oct 20 (IANS) The government will look into the tax concerns of foreign investors in India, the finance ministry assured a group of foreign portfolio investors (FPIs) and foreign institutional investors (FIIs) on Tuesday.
“Number of suggestions have come and they have to be looked into and it will be placed in front of the government and government will take a decision. Tax issues were naturally raised. We discussed fund management industry in India,” Economic Affairs Secretary Shaktikanta Das told reporters here after the pre-budget consultation meeting.
“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,” he said.
In a bid to ease doing business in India’s financial markets, the finance ministry had convened a meeting here of FPIs including Citibank, Deutsche Bank, Fidelity, Goldman Sachs and BlackRock.
The meeting was attended by senior officials of the Reserve Bank of India (RBI), markets regulator Securities and Exchange Board of India, and the Central Board of Direct Taxes (CBDT).
FPIs also asked the government to make the concessional 5 percent withholding tax on domestic corporate bonds a long-term one, according Nomura Fixed Income Securities managing director Neeraj Gambhir.
“The industry has been asking for a more longer-term treatment on it. It’s 5 percent, it’s due to expire in 2017,” he said.
“Lot of people are making long-term investments. They need clarity on how long this is going to stay,” he added.
According to sources, the government wanted to know from FPIs about the steps needed to encourage them to set up business in India.
Currently, foreign investors routing funds through countries with which India has Double Taxation Avoidance Agreement (DTAA) are exempt from paying short-term capital gains tax.
However, if foreign fund houses set up business in India, they would be liable to capital gains tax as per the domestic taxation law.
FPIs’ net investments in 2014-15 in Indian equities stood at Rs.110,000 crore and in bonds at Rs.166,000 crore.
Das also dismissed ratings agency Standard and Poor’s (S&P) remarks on the Indian economy as a “point of view”, and said GDP will expand by over 7.5 percent in the current fiscal.
“If S&P has taken a view, it is their point of view. “We are expecting this year about 7.5 percent plus growth. The inherent stability factors of the economy are quite strong,” he said.