Cannot Impose Capital Gains Tax On Mauritius-Routed Funds, Says FinMin

Amidst panic in the stock market over double tax avoidance treaty with Mauritius, government today said India “cannot impose arbitrarily” capital gains tax on investment routed through the island nation.

“How can you do that? There has to be some agreement on that. Right now, it is not there in the agreement. You cannot impose it arbitrarily,” Finance Secretary Sunil Mitra told PTI.

However, he said the two nations are likely to hold discussions on revision of the double tax avoidance treaty, which has been used for routing third country investment into India for availing of tax exemptions.

The BSE benchmark Sensex plunged by over 556 points in intra-day trade today on widespread panic selling by funds as well as retail investors, triggered by reports that the government may impose capital gains tax on investments through Mauritius.


From: http://ping.fm/7uGSX