CBDT wants capital gains tax for all FIIs

RUN-UP TO THE BUDGET 2008-09

At present, the gains made by some FIIs (they invest Rs 50,000 crore to Rs 60,000 crore in Indian capital markets) are treated as business income and are not taxable on the grounds that these institutions do not have permanent establishments in India.  CBDT has cited the instance of the order given by the Authority on Advance Ruling (AAR) in the case of Fidelity Advisory.  In its ruling in January last year, AAR said the income of Fidelity Advisory will be taxed as capital gains and not as business income and that the decision will be binding, irrespective of whether India has a double taxation treaty with an FII