Mumbai: Revenue Secretary Sumit Bose and SEBI Chairman U K Sinha in a meeting with FIIs Wednesday sought to allay foreign investors' fears related to controversial tax residency certificate (TRC) and other concerns.
In a meeting with around 40 FIIs -- that was called at a short notice -- the secretary assured them of remedies for TRC issue and said it is not only on top of his mind but that of Finance Minister P Chidambaram's as well, according to sources.
When asked whether the meeting was satisfactory, an FII said: "The officials were very receptive to us and we had a very frank and fruitful discussion, even though there were no concrete takeaways."
On TRC, FIIs demanded that government allow them to offer all types of certificates from different sources as no country gives all of them in a single docket, pending final norms.
Highlighting problems related to TRC, FIIs said many governments do not have the year of incorporation on the certificate, while many others don't even offer proof of address, sources said.
Further, FII wanted that all foreign investors be treated at par on withholding tax.
"We want every foreign investor get the 5 percent withholding tax benefit, which can help boost debt investments, so that their cost of funds is taken care of," said an FII.
FIIs demanded that the recent reduction in the withholding tax rate to 5 percent from 20 percent should be extended to every kind of foreign investor and there is an urgent need to clear the doubts on the technical matters.
Besides, they sought clarity on the reduction of withholding tax for Qualified Foreign Investors (QFI).
Another important issue discussed was the subdued response of QFIs as well as confusion regarding the tax benefits offered to them.
On GAAR, FIIs sought more dialogue with government even though the implementation has been deferred by two years.