Participatory Notes

Today our Finance Minister said that participatory notes holders will not be liable to pay tax. This has helped alleviate a sense of nervousness triumphing among Foreign Institutional Investors (FII ). But many of us don’t even know what do we mean by participatory notes (P-Note). Participatory note is a tool used by foreign institutional investors to invest in Indian securities. These are used by those investors who are not registered under SEBI (Securities Exchange Board of India) to invest in India. These are like unauthorized ADRs. Indians don’t like Participatory Notes as they can’t figure out who is holding their securities.

But no tax on Participatory notes will help India to attract lot of Foreign Institutional Investors.

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