Normal overseas investors cry foul over retro amendment

It's not just Vodafone who's crying foul against the retrospective amendment recently introduced by the finance ministry. Even global offshore funds, whose portfolios include investors who are neither FIIs or QFIs are unhappy as they too could now come under the tax net, report CNBC-TV18's Mitra Joshi and Archana Shukla.

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Offshore mutual fund companies who invest in Indian stocks are in a dilemma. Even though the 'retrospective amendment' introduced in the finance bill has come into effect, there is still no clarity on tax obligations on the investors and this has raised concerns from global mutual funds associations like ICI and ASIFMA.
These global associations argue that as per the new guidelines, investors
who do not qualify as FIIs or QFIs, but still invest in the Indian market
through offshore mutual funds may now face double or triple taxation on their investments- first in India and second in tax-treaty countries like Mauritius and third in their own home countries.
Gautam Mehra, executive director-tax and regulatory services, PwC, "When investors in off-shore mutual funds make any gains on the units that they hold in the offshore funds, those gains can also be technically covered by the ambit of these provisions."
Experts say that this could further dampen the already cooling global investor sentiment regarding India. 
Nishith Desai, founder, Nishith Desai Associates, "We are unfortunately sending a clear message to outside investors that 'India doesn't need you, you are not welcome in India. If you want to come, this is our law. We are a big market and have cheap labour'. That tone has created lot of sensitivity overseas."
Global associations, including  ICI and ASIFMA, have represented to the finance ministry and urged the government to bring out clarifications before June 30 which is the accounting deadline for most offshore companies.
But there has been no action by the government in this regard so far and given the current climate in North Block, investors don't expect anything till the new FM takes charge.