The tax department is all set to tighten the noose around foreign investors who have been investing through shell companies in tax havens. CNBC-TV18 learns that the I-T dept will ask FIIs and foreign investors to file tax residency certificates if they are situated in a country with which India has a DTAA.
Legal experts say all forms of investment from Mauritius will now come under the scanner. Tax lawyers add that the taxman may eventually start going beyond just the tax residence certificate.
Moreover, the confusion over general anti-avoidance rules (GAAR) spooked the markets.
Mukesh Butani, chairman at BMR Advisors believes to some extent the SC verdict inAzadi Bachao Andolan case, which was rendered on the back of a government circular of 2000, gets diluted. He says now that applies to all forms of investment that comes from Mauritius, be it an FII or FDI route.
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