India continues to be attractive to investors: Deloitte

08 Jan 2013

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India continues to be an attractive investment destination despite the taxation uncertainties, global consultancy Deloitte said today, even as rating agency Fitch today renewed its warning of a possible downgrade of India's sovereign rating.

Deloitte, however, said investors were looking for more clarity on certain tax issues and were less concerned about the country missing the 5.3 per cent fiscal deficit target.

"While India continues to be an attractive investment destination, the dynamic Indian tax framework create some apprehensions in the investors' perception about the approach on the tax issues related to transactions in India," it said.

Majority of the participants in a survey conducted by Deloitte Touche Tohmatsu India Private Limited said the Shome committee guidelines were adequate although they said they were concerned about the independence of the GAAR panel.

Multinational companies felt the need to formulate a tax policy in relation to intermediate holding companies (IHC) to remove current uncertainties.

According to the survey, even after the recent concerns over India-Mauritius treaty and approach of Indian tax authorities towards IHC investments, 62 per cent of the respondents consider investment through IHC in India as the most viable option. Despite the general perception that such investments are made for tax benefits, about 51 per cent of the respondents considered factors other than reduction in tax cost as crucial for deciding IHC jurisdiction.

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