The circular gave rise to fears that there there would be
'triple taxation' on the activities of the India - focused
funds overseas. The circular implied that India dedicated funds would be taxed if they sell shares
overseas.
Besides overseas individual investor of the fund would also be taxed in India and would not get any tax credit
in his home country. The direct taxation avoidance
agreement ( DTAA) also does not come to the rescue of
investors.
The tax arises when Indian assets of the fund constitute fifty % of the total asset value of funds globally or Rs. 10 crore. However those having less than 5 % of fund shares exempted from the tax.
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