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FIIs meet PM, voice concern on GAAR, MAT

A day after meeting the chief executives of various multinational firms, Prime Minister Narendra Modi on Tuesday interacted with foreign institutional investors (FIIs) to address their concerns.

The meeting, organised by BlackRock, was also attended by Finance Minister Arun Jaitley, Reserve Bank of India Governor Raghuram Rajan and Securities and Exchange Board of India Chairman U K Sinha. Ahead of the 2015-16 Budget, Jaitley sought suggestions from FIIs in this regard.

Among others, officials from KKR, Duetsche Bank and Merrill Lynch were present at the meeting.

The issue discussed the most was the General Anti Avoidance Rules (GAAR), with FIIs pressing their scheduled rollout in April be deferred. If this wasn’t the case, the foreign investment community should be exempted from their applicability, the investors said.

Initiatives to boost ‘ease of doing business’ in India and reduce the paperwork to get an investment or a project running were also discussed.

The investors said they were pleased with the government’s decision not to contest the Bombay High Court’s order in the Vodafone case. They added subsequent instructions from authorities pertaining to tax on transfer of shares within group companies had provided clarity on the issue, sources said.

The investors pointed to the need for clarity on royalty payments for information technology companies, tax on advertisement and promotional expenses as part of branding, demand for 10 per cent upfront payment of tax before a case went into litigation and show-cause notices on Minimum Alternate Tax.

Rajan on Tuesday pressed for FIIs investing in the corporate bond market for longer periods.

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