A meeting between Indian and French tax authorities on the sidelines of a recent G20 summit has set off alarm bells among foreign portfolio investors (FPIs) based in France, three people with direct knowledge of the matter said.
The meeting, around potential tweaks to the double taxation avoidance agreement (DTAA) between India and France, has led to apprehension among foreign funds that India may soon renegotiate the treaty to eliminate the capital gains tax exemption. Currently, France and the Netherlands are the only major jurisdictions benefiting from a tax treaty with India that grants exemption from capital gains tax on share sales.
This comes ahead of Prime Minister Narendra Modi’s visit to Paris next week, where several new bilateral agreements will be discussed.
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