FIIs to file residency proof to avoid tax evasion issues

The tax department is all set to tighten the noose around foreign investors who have been investing through shell-companies in tax havens. CNBC-TV18 learns that the I-T department will ask FIIs and foreign investors to file tax residency certificates if they are situated in a country with which India has a DTAA.

70% of the foreign investment in India does come through Mauritius. All of these companies that have structures through which they bring in investments to any country with which India has DTAA will have to now give a tax residency certificate to prove that they are residents of that country and they are not established in that country for the sole purpose of tax evasion, reports Aakansha Sethi.
The government had amended section 90 and section 90A of the Income Tax Act in the Budget to provide for this, but now the income tax department is going to make sure is going to ask all of these companies to actually file these TRCs.
Secondly, the government has spoken about the introduction of GAAR