Tax pact won't hit FDI: Arun Jaitley

New Delhi: Finance minister Arun Jaitley on Sunday  said that investors must pay taxes on money earned in India and ruled out any depletion of FDI due to imposition of capital gains tax on investments coming from Mauritius from next year.

The minister was of the view that the country no longer needs any “tax-incentivised route” to attract foreign investments as India economy is now “strong enough”.

Mr Jaitley indicated that the new treaty with Mauritius will check round-tripping of funds and would help boost domestic consumption. Last week in a treaty between the two countries, India will begin imposing capital gains tax on investments in shares through Mauri-tius from April next onwards. “Eventually markets have to operate on inherent strength of the (Indian) economy,” said Mr Jaitley  said in an interview to a news agency.

Stating that the Mauritius tax treaty created a “tax-incentivised route” at a time when India was looking at foreign investments to boost economy, he said the economy has become strong enough and “now those who earn must pay taxes”.

The imposition of taxes has been “done in a phased manner to avoid shock and I don’t expect any depletion to FDI due to this, he said.