India has sent a lot of negative signals by announcing GAAR (General Anti-Avoidance Rule); however FIIs can heave a sigh of the relief as same has been postponed by one year. However now again anxiety has erupted between FIIs and investors due to non clearance on the issue of capital gains.
The clarity which is required is for capital gains which arises from the transfer of shares or interest in a non-Indian company — in case the share or interest derives directly or indirectly its value substantially from assets located in India — will be taxable in the country.
Finance ministry should provide clear directions as ambiguity has already cost our nation dear in form of USD 10 billion investments being put on hold in a month of announcing the GAAR and it can threaten entire FII holding of over USD 200 billion.
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