MAT effect: FPI inflows hit 4-month low of Rs 15,000-cr in April

Bought shares worth Rs 11,721 cr ($1.87 bn) in April

Investments by Foreign Portfolio Investors (FPIs) in the country's capital markets hit a four-month low of just over Rs 15,000 crore in April amid taxation related concerns.

FPIs have bought shares worth Rs 11,721 crore ($1.87 billion) in April, while they purchased debt securities to the tune of Rs 3,612 crore ($570 million), taking their net investment to Rs 15,333 crore ($2.44 billion), as per data compiled by Central Depository Services Ltd.

This was the lowest level of investment since December, when overseas investors had pumped in Rs 12,225 crore in the country's capital markets (equity and debt).

The pace of investment has slowed down in April on apprehensions that the government will impose a 20% minimum alternate tax (MAT) on profits earned by overseas investors.

Besides, the forecast of weak monsoon has lowered enthusiasm for Indian equities among foreign investors.

The Income Tax department has sent notices to 68 foreign investors for payment of dues totalling Rs 602.83 crore towards MAT.

Finance Minister Arun Jaitley on Thursday offered tax relief to foreign investors, exempting income from securities transactions, royalties and technical service from MAT in a move to soothe frayed nerves.

The government is likely to clarify on the MAT issue whether it will be applicable for investors coming from countries with which India has double tax avoidance pacts.

Since January 2015, total net investment by overseas investors in the Indian capital markets stood at Rs 94,308 crore ($15.2 billion).