No tax liability on P-notes holders: Pranab Mukherjee

"The Indian tax authorities would examine the tax liability of the said financial institutional investors (FIIs). However, the tax authorities would not go beyond the FIIs to check any further detail about the participatory notes holders," Mukherjee told reporters.

"Accordingly, the question of liability for tax in India of participatory note holders would not arise."

P-notes are issued by foreign portfolio investors registered with the Indian market regulator, or by their sub-accounts, to investors overseas and they offer the buyer anonymity.

A lack of clarity on taxation of P-notes has contributed to the recent volatility in the domestic share market.