How 1996 World Cup is back to haunt foreign portfolio investors

The Budget earlier this year announced a 20% withholding tax on dividends paid to FPIs

A recent Supreme Court ruling on the 1996 Cricket World Cup could have implications for foreign portfolio investors.

The ruling held that provisions for deducting tax at source will apply even to those covered by tax avoidance treaties. The Budget earlier this year announced a 20 per cent withholding tax on dividends paid to FPIs. Taken together, it may mean FPIs cannot seek treaty protection against the new withholding tax that companies are required to deduct at source, according to experts. The apex court order pertains to when the cricketing bodies of Pakistan, India, and Sri Lanka formed a joint