Markets surge as Pranab spares P-notes from tax

The Bombay Stock Exchange Sensex continued to trade sharply higher today following clarification by finance minister Pranab Mukherjee that there will be no tax on P-notes issued by foreign financial institutions (FIIs).

He, however, said the tax exemption would be limited to P-notes, he said.

"Tax authorities would examine the tax liability of the said financial institutional investors (FIIs). However, the tax authorities would not go beyond P-notes to check any further detail about tax liability of the participatory note holders," Mukherjee said.

"Accordingly, the question of liability for tax in India of participatory note holders would not arise."

P-notes are issued by foreign portfolio investors registered with the market regulator Securities and Exchange Board of India, or by their sub-accounts, to investors overseas for whom they buy anonymously.

Today's spike was largely supported by Reliance Industries and ICICI Bank with 3 per cent gains each.