Senior Finance Ministry officials meet FIIs; TRC, other issues discussed

MUMBAI: Senior Finance Ministry officials, including Revenue Secretary Sumit Bose, today sought feedback on tax-related issues from foreign investors in a meeting with leading FIIs which also attended by Sebi Chairman U K Sinha.

"We discussed tax-related issues with FIIs," a senior official said after the meeting here.

Among other things, the revenue officials discussed with FIIs the Tax Residency Certificate (TRC) issue, which became a big concern for foreign investors after the Budget 2013-14 said TRC was a necessary but not a sufficient condition for claiming benefits.

Concerns were expressed that the provisions regarding the TRC would make it difficult for investors routing their funds from low-tax countries like Mauritius, Cyprus and Singapore to avail the benefits of Double Taxation Avoidance Agreement.

The Finance Bill 2013 had proposed to "amend Sections 90 and 90A in order to provide that submission of a tax residency certificate (TRC) is a necessary but not a sufficient condition for claiming benefits under the agreements referred to in sections 90 and 90A".

Earlier, the Finance Ministry had sought to assure worried investors saying their concerns on TRC for claiming treaty benefits will be "suitably" addressed during discussion on Finance Bill in Parliament.

Issues related with Qualified Foreign Investors (QFIs), whom the government is targeting for more investment, also came up for discussions.

A QFI is an individual, group or an association resident in a foreign country that is compliant with Financial Action Task Force (FATF) standards. QFIs are, however, a separate category from FIIs.

Finance Minister P Chidambaram is on week long two-nation tour to the US and Canada to sell India's growth story and woo foreign investors.