29 April, 2014
- SEBI, on October 05, 2013 had announced FPIs as a new category of foreign investors and subsequently, SEBI on January 07, 2014 had notified the new SEBI FPI Regulations outlining the registration process and operating framework for the FPIs. In the absence of a corresponding change in the Income Tax Act, 1961 (‘ITA’) (which contains provisions providing for beneficial tax treatment for FIIs) there was confusion over the tax regime governing FPIs. Central Board of Direct Taxes (‘CBDT’), by a notification dated January 22, 2014 has specified that FPIs registered under the FPI Regulations will get the same tax treatment as FIIs under the ITA.
- CBDT has clarified that in case of remittance to non-residents, even if the remitter has not approached the assessing officer in advance for determining tax at source, the liability of remitter is confined only to the tax on the sum chargeable to tax, embedded in the gross remittance, and not tax on the gross sum itself. Consequently, the remitter’s liability as an ‘assessee-in-default’ will be confined to the amount of tax on chargeable sum only.
For further information, please contact:
Zia Mody, AZB & Partners
[email protected]
Abhijit Joshi, AZB & Partners
[email protected]
Shuva Mandal, AZB & Partners
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Samir Gandhi, AZB & Partners
[email protected]
Percy Billimoria, AZB & Partners
[email protected]
Aditya Bhat, AZB & Partners
[email protected]