Tax Breaks Only For Foreign Investors?

Foreign investors, who don’t pay any short-term capital gains tax, have been busy muttering under their breaths about GAAR, and India’s spineless market operators have been peddling this line. The point is simple: if Indians can pay short-terms capital gains tax, why can’t foreign institutional investors (FIIs)? Why should we bend over backwards to give them tax breaks?

The same logic should apply to Vodafone – however unfair it may sound. The fact is there are simply too many deals involving Indian assets being struck offshore – and it is time to tell these people that they can’t do this anymore. The principle should be: if you want our assets, pay our taxes. Also, a pattern is emerging where even Indian businessmen are buying Indian properties through offshore deals (the Sesa Goa purchase is one example). And the buzz is that half the investment coming through participatory notes (P-notes) into Indian stocks is really Indian illegal money round-tripping to make money on trading.

 R Jagannathan  The Voda tax: Why India can’t be a pushover in taxation