Quick clarification on TRC issue to soothe investor sentiments - Angel Broking

Markets reacted negatively post the budget on account of confusion regarding amendment to the requirements for claiming the benefit of DTAA (double taxation avoidance agreement). But the finance ministry was quick to clear the confusion regarding its statement on furnishing of TRC (tax residency certificate) being a 'necessary but not sufficient condition' to qualify for the benefits. It elucidated that the validity of TRCs held by foreign investors will not be questioned and accepted as evidence of residence while concerns over DTAA will be addressed suitably in the Finance Bill.

We believe that the government is unlikely to fray nerves of foreign investors since capital inflows are of utmost importance to finance the widening current account deficit. In fact, the Finance Minister in his budget speech admitted that the current account deficit is more worrying than the fiscal deficit and the economy needs to find over USD75bn to finance the CAD in this as well as the coming year too.

Source : Equity Bulls

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