Need to check round-tripping of funds: Subbarao

Written by feBureau | Mumbai | Updated: Apr 5 2013, 06:35am hrs
There is a need to prevent round-tripping of Indian funds through tax-haven economies such as Mauritius, said the Reserve Bank of India (RBI) governor D Subbarao on Thursday.

India should make sure there is no money generated through money laundering and, around the world, there should be no jurisdiction where this round-tripping is possible, said Subbarao in an interview in a local Mauritius magazine, a copy of which was posted on the central bank's website on Thursday. Under the Double-taxation Avoidance Agreement between the Indian and the Mauritius government, companies that a tax residency certificate is enough to avail tax benefits.

However, a clause in the finance bill of 2013 that says that residency certificates are not sufficient to claim treaty benefits raised concerns among foreign institutional investors using the Mauritius route to invest in India.

Subbarao said that not just India but partner nations such as Mauritius too should take efforts to prevent the money laundering.