Flip-flop on taxing indirect transfers

Tax experts expect significant clarifications in the Budget to address double-taxation concerns

On December 21, the Central Board of Direct Taxes (CBDT) issued a circular clarifying that offshore vehicles, including foreign portfolio investors (FPIs), were subject to indirect transfer provisions. The move set alarm bells ringing in fund houses from Hong Kong to London and New York.
 
Effectively, the indirect transfer provisions imposes taxes on offshore transactions if the value of Indian assets represent 50 per cent or more of the value of all assets owned by the FPIs.
 
The circular contained responses to queries on the indirect transfer provisions in a number of different contexts, such as redemptions by