INTEREST EARNINGS
Ever since the DTAAs have been amended, FPIs are showing gains in the form of interest income after a 15 per cent tax arbitrage Interest income of FPIs is subjected to 5 per cent tax, against 15-20 per cent for capital gains
The trend may become more prominent with time The concessional capital gains rate for Mauritius & Singapore is expected to fade away by 2019 Till date, FPIs categorise gains of NCDS as capital gains, being exempted from paying any shortterm capital gains tax under several treaties NCDs are debt instruments with a fixed tenure Unlike regular debentures, these cannot be converted into equity