Mauritius, Singapore investors continue to see rise in assets

Investments routed through Mauritius and Singapore into Indian markets continue to surge higher despite the government imposing capital gains tax on investments coming through these countries as a part of efforts to curb tax evasion.
As per the latest data about 'asset under custody' of foreign portfolio investors (FPIs), the US continue to remain the top country for such investments at the end of April, while Mauritius and Singapore have retained their second and third positions, respectively.
Besides the US, the AUC of investors based in Mauritius and Singapore soared higher during April, shows the data compiled by leading depository NSDL.

Overall, India has received a total portfolio investment to the tune of Rs 27.86 lakh crore till April, 2017. Out of this, Mauritius-based fund managers accounted for Rs 5,18,946 crore as compared to Rs 5,11,293 crore invested in March.
Besides, asset under custody of FPIs from Singapore increased to Rs 2,81,785 crore in April-end from Rs 2,74,472 crore in the preceding month, as per the latest update.
The US accounted for the largest chunk of 'assets under custody' of FPIs at over Rs 8.91 lakh crore at April-end, higher than Rs 8.58 lakh crore invested in March.

The surge in inflow comes even as the Indian government amended the double taxation avoidance treaty with Singapore and Mauritius.

The new rules have been made to ensure that foreign investors using DTAAs with Mauritius and Singapore do not get away without paying capital gains tax on their investments.
Under the new treaty, India has the right to tax capital gains arising on Indian securities sold by Singapore and Mauritius residents -- effective from April 1.
Capital gains tax has been imposed at 50 per cent of the prevailing domestic rate for two years beginning April 1, 2017. Full rate will apply from April 1, 2019.