Asia Pacific: Recurring nightmares

Author: | Published: 23 Apr 2015

Initially foreign investors were optimistic about India's budget proposals, which deferred the General Anti-Avoidance Rules (Gaar) and reduced the corporate tax rate. But a little-noticed exemption means foreign investors could be liable for an 18% minimum alternate tax (MAT) – and it will be applied retroactively.

A Finance Bill provision exempts foreign institutional investors (FIIs) from paying MAT on capital gains from a narrow band of securities transactions. Counterintuitively, that exemption has harmed India's investment environment.

Previously MAT applied only...