MAT issue hits inflows as FPI money at this year's lows

Overseas investors have poured in over $2.3 billion in the Indian capital markets this month so far, taking total inflows to $15 billion since January.

Foreign Portfolio Investors (FPIs) have bought shares worth $2.6 billion (Rs 16,316 crore) till April 24, while they pulled out $261 million (Rs 1,643 crore) from the debt markets, taking their net investment to $2.33 billion (Rs Rs 14,673 crore), as per data compiled by Central Depository Services Ltd.

However, the pace of investment by overseas investors has slowed down in April compared to the previous three months on apprehensions that government will impose a 20 per cent minimum alternate tax (MAT) on profits earned by them.

Besides, forecast of weak monsoons has lowered enthusiasm for Indian equities among foreign investors.

The Income Tax department has sent notices to 68 Foreign investors for payment of dues totalling Rs 602.83 towards MAT.

The government has recently clarified that foreign investors can avail of residence benefits from tax treaties it has with some nations, and avoid being subjected to MAT. A formal clarification to this effect is likely in the Finance Bill to be passed by Parliament next month.

FPIs infused a net $3.34 billion in March, $3.96 billion in February and $5.45 billion in January.

Since January 2015, total net investment by overseas investors in the country's capital markets (equity and debt) stood at $15.1 billion (about Rs 93,648 crore).