FPIs: FPIs can have their cake, and then pay

Currently, if an entity miscalculates dividend tax and pays less advance tax, it will subsequently have to bear the interest on the tax that was underpaid.


In the current system, the TDS being charged for FPIs was higher than the actual tax liability of FPIs. Further, offshore funds had to wait until the end of the financial year to claim a refund from the Indian tax department.

The budget has eased taxes on dividends for overseas investors and upcoming instruments like Real Estate Investment Trusts (REITs) and Infrastructure Investment Trusts (InvITs).The proposal to allow foreign portfolio investors (FPIs) to avail treaty rates for tax deducted at source (TDS) for dividends is expected to cut the TDS rates for offshore funds by as much as 50 per cent. Until now, FPIs were subject to TDS of up to 22 per cent for


ET Bureau

3 mins read, Last Updated: Feb 2, 2021, 07:11 AM ISTGIFT ARTICLEFONT SIZE





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