The Finance Minister Pranab Mukherjee said the holders of participatory notes, or P-notes, would have no tax liability, adding that a clarification to this effect would be issued in due course, reports said.
"The Indian tax authorities would examine the tax liability of the said financial institutional investors (FIIs). However, the tax authorities would not go beyond the FIIs to check any further detail about the participatory notes holders," he said.
"Accordingly, the question of liability for tax in India of participatory note holders would not arise."
P-notes are issued by foreign portfolio investors registered with the Indian market regulator, or by their sub-accounts, to investors overseas and they offer the buyer anonymity.
A lack of clarity on taxation of P-notes has contributed to the recent volatility in the domestic share market.
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June 05, 2026 16:18 ET A busy week for economic news flow saw a slew of reports being released that reflected the trends in the U.S. labor market. In Europe, economic growth and inflation data gained attention as the European Central Bank and Bank of England head for policy session later in the month. In Asia, the monetary policy session of the Indian central bank was in focus as the country, a major oil importer, reels under the pressures of a weaker rupee and rising inflation.