Apart from the bond yields and geopolitical crisis, another trigger for FPI selling was the tweak in India's tax treaty with Mauritius, which would now impose higher scrutiny on investments
Assessee appealed it was denied benefit of treaty on capital gains from share transfer
The India-Mauritius treaty was designed to attract foreign investments in the early 1990s when India's foreign exchange reserves were alarmingly low
India-Mauritius DTAA was amended to introduce a levy to prevent investors using the island nation as a shelter to avoid levies
Amended treaty removes a longstanding advantage that allowed investors to avoid paying capital gain taxes in India
Derivatives and other forms of securities will continue to be governed by existing provision of being taxed in Mauritius: Shaktikanta Das