Good news for India-focused funds: Govt looking to resolve triple tax issue

Finance ministry has raised the matter with the revenue dept, seeking a quick clarification

The revenue department is likely to settle the issue of “triple taxation” that is spooking foreign portfolio investors (FPIs) after a recent circular brought India-dedicated funds under the purview of the withholding tax.

After a representation by FPIs, the capital markets division in the finance ministry’s department of economic affairs raised the matter with the revenue department, seeking a quick clarification.

“We are examining the issue. We will issue a clarification if need be,” Revenue Secretary Hasmukh Adhia told Business Standard.

The recent circular on indirect transfer of assets implied that India-dedicated funds would be taxed if they sold shares. Besides,