Market Watch

How are FPIs trying to avoid India tax hit

FPI Surcharge
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FPI Surcharge
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At least 30 big-ticket foreign portfolio investors (FPIs) have reached out to their advisers, seeking advice for converting themselves from trusts and association of persons into corporates to avoid the extra tax on the super-rich.

Here is a bird’s eye view on the situation:

Budget raised surcharge on AOPs (Association of Persons)
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Budget raised surcharge on AOPs (Association of Persons)
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Leading FPIs reached out to advisers on shift from trusts/AOPs to corporate structures
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Leading FPIs reached out to advisers on shift from trusts/AOPs to corporate structures
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About 40% FPIs invest as trusts
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About 40% FPIs invest as trusts
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However, lawyers are not in favour of conversion,
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However, lawyers are not in favour of conversion,
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Lawyers fear such a move could attract General Anti-Avoidance Rules (GAAR)
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Lawyers fear such a move could attract General Anti-Avoidance Rules (GAAR)
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Such transfers through exchanges have STT and capital gains implications
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Such transfers through exchanges have STT and capital gains implications
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Govt favours conversion. However, it has questioned use of trusts
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Govt favours conversion. However, it has questioned use of trusts
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