P-note investors may shift to derivatives

A large number of investors coming into India through participatory notes (P-notes) are likely to switch from equities to derivatives as India’s tax treaties with Mauritius, Singapore, and Cyprus exempt gains made in derivatives’ space.

“P-note issuers see the equities' business as dwindling over time due to taxation. Volumes are likely to shift from equities to derivatives,” said a tax consultant. 
 

Changes to India’s tax treaties with Mauritius, Cyprus, and Singapore dropped tax exemption for gains made on shares. However, income from futures and options (F&Os) continues to remain exempt from tax in India, according to those treaties. 

“This has