Fears around P-notes return to dampen D-Street mood

The ghost of participatory notes (PNs) has started haunting India’s stock markets. The fear that the income-tax (I-T) authorities would go after PN investments in equities, as General Anti-Avoidance Rules (GAAR) is implemented from April 1, saw the benchmark stock indices take a beating on Monday. GAAR, announced in Budget 2012-2013, intends to crack down on tax evasion. Under GAAR, merely a tax residency certificate (TRC) may not be enough for foreign institutional investors (FIIs) to avoid paying taxes on capital gains in India. “Such a thought has already spread a ‘reign of terror’ among foreign institutional investors,” said Nishith Desai, founder of Mumbai-based Nishith Desai Associates


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