Almost one-third of the money that is invested abroad as outbound investment have been in tax havens.

Over 80 companies invested in countries like Mauritius, British Virgin Islands and Cyprus - popularly known for their liberal taxation regimes, where usually not many questions are asked about investments to and from these markets.

Investments by Indian companies in overseas markets were over $5 billion in June, according to a Reserve Bank of India release on overseas direct investment, which the central bank has put in public domain for the first time. However, much of these outflows ($3.9 billion) are in the form of guaranteed issues.

Outflows worth $600 million are in equities and $900 million is in the form of debt. Most of the investments are in wholly-owned subsidiaries and joint ventures.

Mundra Port was the highest investee in the overseas market, with a $2.2-billion investment as credit guarantee in Australia, followed by Biocon which made a $350-million investment in its Malaysian subsidiary and Sun Pharma's $300-million investment in British Virgin Islands.

Put simply, a tax haven is a foreign country that has unique offerings for investors, the primary one being relatively low tax rates in comparison to other countries.

Jigar Saiya, partner at MZS & Associates, said: "Countries like Mauritius have an exemption of capital gains tax. In India, a company has to pay 30% on the operating income while in Mauritius it is 3%." Notably, Mauritius accounts for 60% of equity investments by Indian companies. Tax experts say countries such as British Virgin Islands are used by companies to save on tax in the US, where a company might have a base