The Central Board of Direct Taxes (CBDT) has issued a set of 26 frequently asked questions (FAQs) on the tax framework applicable to qualified foreign investors (QFIs).
QFIs are a new category of investors — foreign retail and high networth investors — that the Government is looking to attract to invest directly in the Indian equities market.
According to the FAQs, qualified depository participants (QDPs) will primarily be responsible for tax deducted at source liability before making remittance to QFIs.
The QDPs will be treated as representative assessee, responsible for TDS shortfall even if the QFI ceases to be a client.
The QFIs’ income will be computed on settlement basis and not on transaction basis.
Also, the FAQs clarify that the income-tax law does not prescribe any time limit for scrutiny of transaction for TDS purposes.
The current year’s losses can be adjusted in computing TDS liability but without rollback.