the Direct Tax code has finally revealed that FIIs would now be taxed for due Capital Gains. The measure apparently was blocked for the last 18-20 months because India was and is treaty shopping to prevent losing revenue through hot money destinations like Mauritius covered by DTAA and legislating tax free profits to all and sundry. Brazil and Korea were the first to impose taxes to even out incoming flows and were specifically targeting hot money. Indian regulation is more broadbased and would require more Corporate Law changes and the inevitable wrangling for another year or so. In the meantime IFRS has also been delayed worldwide for reintroducing profit booking on hedges and /or in India's case trying to market price in cases where Indian regulators want the leases/ distress sales and Fixed income portfolios to be repriced but not transmitted to the income statement..

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