The Telegraph
Tuesday , April 8 , 2014
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Shome view on P-note tax

Parthasarathi Shome in Calcutta on Monday. Picture by Kishor Roy Chowdhury

Calcutta, April 7: Parthasarathi Shome, adviser to Union finance minister P. Chidambaram, today said the new government could explore the option of imposing a tax on participatory notes in the annual budget after the general elections.

Participatory notes (PNs) are instruments issued by registered foreign institutional investors (FIIs) to overseas investors, who want to invest in the domestic stock markets without registering themselves with market regulator Sebi. Shome was attending a programme of the Institute of Cost Accountants of India here today.

PNs are preferred by overseas investors as an investment source because they are hassle-free. Market analysts maintain that the government need to be cautious because additional taxation on foreign investors can have a negative impact on the stock market.

Sebi move

Sebi today restricted foreign investors from buying government securities having a maturity of less than one year. The move aims at encouraging inflows of long-term overseas fund.