GAAR should not apply to FPI: ASSOCHAM

Q.  What does GAAR stand for in the context of foreign portfolio investors on redemption and maturity of participatory notes?
- Published on 14 Jul 16

a. General Anti Avoidance Rules
b. General Anti Action Rules
c. General Anti Affirmative Rules
d. None of the above

ANSWER: General Anti Avoidance Rules
 
General Anti Avoidance Rules/GAAR should not apply to foreign portfolio investor on redemption and maturity of participatory notes, according to industry body ASSOCHAM.
  • The chamber said it was common for investors to gain economic exposure to Indian securities through P-notes
  • ASSOCHAM holds that existence of a P-Note arrangement or status of underlying Indian position referencing P-notes or passing economic benefits or status of underlying Indian position referencing P-notes or passing of economic benefits to P-note holders should not be the criteria for evaluation commercial substance at the FPI level.
  • The body also said GAAR provisions should not apply to FPI on redemption or maturity of P-notes

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