Netherlands to be the new route for FIIs in India ?

With capital gain tax now being applicable even on investments coming from Mauritius and Singapore , Netherlands could be the next favoured investment stop for the Foreign Institutional Investors (FIIs) wanting to save on taxes while exiting  India investments. 

Netherlands seems promising as there are  provisions in the treaty that give certain advantages to investors. The partial protection will be lucrative for the foreign investors and they may prefer the Netherlands route to invest in India.  The provision states that if  the investors sell the shares to foreign companies there will be no tax liability in India. However if the shares are sold to an Indian company it has to pay tax in India. 

While analysts are divided on their views on the effect of amendments in the Double Tax Avoidance Treaty (DTAC) regarding the money flow in Indian markets , government remains confident that the foreign investment coming into India will not get impacted due to the amendments alone. 

There is a belief that the investors in US and UK who have been investing in India via Mauritius or Singapore will now invest directly.  Singapore and Mauritius routes together have contributed to more than 50 percent of Foreign Direct Investment (FDI) and since the amendments have been put in place this lucrative route will cease to be advantageous. The amendments will also impact the private equity and venture capital investments flow in India .