• | creates rights, or obligations, which are not ordinarily created between persons dealing at arm’s length; |
• | results, directly or indirectly, in the misuse, or abuse, of the provisions of IT Act; |
• | lacks commercial substance; or |
• | is entered into, or carried out, by means, or in a manner, which are not ordinarily employed for bona fide purposes. |
• | An FPI who has not availed itself of any benefit under a tax treaty and has made investment in accordance with the Securities and Exchange Board of India (Foreign Portfolio Investors) Regulations, 2019; |
• | An investment made by a non-resident, directly or indirectly, in an FPI; and |
• | Any arrangement where the aggregate tax benefit to all the parties of the arrangement in the relevant financial year does not exceed INR 30 million. |
• | Dividend: income-tax at the specified tax rate of 20%1 , under the IT Act. The applicable tax is withheld by the dividend-paying issuer at the time of payment. The Fund being a resident of USA, may claim the benefit of the India-USA Double Taxation Avoidance Agreement (“DTAA”), which provides a beneficial rate of 15%, subject to the Fund holding at least 10% of the share capital carrying voting power of the Indian company distributing dividend. |
1 |
All tax rates mentioned in this Indian Tax Disclosure section are exclusive of the applicable surcharge and health and education cess, unless otherwise specified. |
• | Interest: |
1. | Interest payable to an FPI (until June 30, 2023) with respect to investments made in rupee-denominated bonds (RDBs) of Indian companies and Indian government securities, subject to compliance with certain conditions; and |
2. | Interest payable to a non-resident with respect to approved foreign currency loans and investment in long-term bonds, including certain RDBs, issued before June 30, 2023. |
• | Securities Transaction Tax: |
• | 0.1% payable by the buyer and 0.1% by the seller on the value of transactions of delivery-based transfer of an equity share in an Indian company entered in a recognized stock exchange; |
• | 0.025% on the value of transactions of non-delivery-based sale of an equity share in an Indian company, entered in a recognized stock exchange and payable by the seller; |
• | 0.05% on the value of transactions of sale of options, entered in a recognized stock exchange and payable by the seller; |
• | 0.01% on the value of transactions of sale of futures, entered in a recognized stock exchange and payable by the seller; |
• | 0.125% on the value of transactions of sale of options where the option is exercised, entered in a recognized stock exchange and payable by the buyer; and |
• | 0.2% on the value of transactions of the sale of unlisted shares by existing shareholders in an initial public offer. |
• | Capital Gains: i.e. |