Going against spirit of law, taxmen deny grandfathering benefit to FPIs

In what is being deemed as going against the spirit of the law, tax authorities are avoiding issuing a nil withholding tax certificate to entities from Mauritius and Singapore that have bought shares prior to April 1, 2017. As per the amended treaties with these countries, shares bought prior to April 1, 2017 are eligible for grandfathering and no capital gains is to be paid on sale of these shares. Capital gains on derivatives and fixed income securities also remain exempt."Tax authorities have become a lot more reluctant to issue the nil or lower withholding certificate in the light of India's renegotiated tax treaties with countries such as Mauritius and Singapore and the grandfathering clause provided by these," said a tax expert, on condition of anonymity. Foreign entities can ask for a tax withholding certificate under section 195 and section 197 of the I-T Act. The assessee can ask for a nil withholding certificate if it believes that it does not have any tax liability in ...

from Markets https://www.business-standard.com/article/markets/going-against-spirit-of-law-taxmen-deny-grandfathering-benefit-to-fpis-118103101153_1.html