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Uniform tax rates for all Foreign Portfolio Invest

Posted @ January 30, 2014, 1:01 am under (International Taxation Services)

On a positive move for overseas entity, Central Board of Direct Taxes has notified, that all FPI (Foreign portfolio Investors) will be treated as FII (Foreign institutional Investors), under the Income Tax Act,1961

The new system is seen as beneficial for QFI's, who earlier to this were subjected to a higher tax rate. They will now be eligible for concessional tax rate w.r.t. capital gains earned on off-market transactions in securities ( like buyback and open offers in equities)


Foreign portfolio Investors (FPI) consists of following three investment categories -

1. Foreign Institutional Investors (FII)  - Category I, entities with lowest risk, including foreign governments and institutions

2. Sub-accounts - Category II, covers appropriately regulated entities, funds whose investment manager is appropriately regulated, university and pension funds

3. Qualified Foreign Investors (QFI) - Category III, those not covered in I & II classification




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