Archive · 3 Aug 2026
India Proposes Tax Relief for Offshore Funds Using Local Managers
India wants to make it easier for foreign investment funds to use Indian managers without paying extra taxes.
Right now, these funds must meet strict rules about how much money they have and how many investors they have.
The new plan would let them skip those rules, as long as they keep most of their money outside India.
This could help India keep money from leaving the country and make it a better place for investors.
Experts say the change will simplify things and encourage more foreign funds to work with Indian managers.
India drafts amendments to exempt offshore investment funds from Indian taxes when managed by Indian fund managers.
Current safe harbour rules require offshore funds to meet size, investor count, and diversification thresholds; new bill would remove these requirements.
The proposal aims to attract foreign investors amid significant capital outflows and provide tax certainty.
Safeguards remain: no more than 5% of assets from domestic investors and no control of Indian business.
Industry experts say the change simplifies compliance and could boost onshore fund management activity.
- Who
- Indian government and offshore investment funds
- What
- Proposed tax relief for offshore funds using Indian managers
- Where
- India
- Why
- To attract foreign investors and provide tax certainty amid capital outflows
- Proposed tax relief
- Exempt offshore funds from Indian tax when managed by Indian fund managers
- Current safe harbour rules
- Minimum corpus of 1 billion rupees, 20 investors, 25% cap per investor
- New bill change
- Removal of size and diversification thresholds
- Safeguards
- Maximum 5% domestic investor assets; no control of Indian business
- Objective
- Attract overseas investors and reduce capital outflows