India cannot "afford" to bring amendments in Income Tax Act in regard to Double Taxation Avoidance Agreement as these changes could dry up FII money flowing into the country, consultant firm KPMG India said today.
"I do not think government can afford to amend the sections 90 and 90A of Income Tax Act in regard to treatment of Double Taxation Avoidance Agreement (DTAA) as this could dry up the FII money when country needs more foreign money to boost growth," KPMG partner (co-head tax) Girish Vanvari said.
Speaking on the sidelines of a meet organised by Bengal Chamber of Commerce and KPMG, he said almost entire FII (foreign institutional investors) money flowing into the Indian capital market is from Mauritius.
India has DTAA agreements with countries like Mauritius, Cyprus and Singapore.
The Finance Ministry today tried to assure worried investors saying their concerns on Tax Residency Certificate for claiming treaty benefits will be 'suitably' addressed during discussion on Finance Bill in Parliament.
The Finance Bill 2013 proposed to "amend Sections 90 and 90A in order to provide that submission of a tax residency certificate is a necessary but not a 'sufficient' condition for claiming benefits under the agreements referred to in sections 90 and 90A".
"There is a lack of clarity for the foreign investor as to what additional details should be furnished to get the benefits," Vanvari said.