ROUND TRIPPING     Introduction:   Round Tripping refers to the capital belonging to a country, which leaves the country and is then reinvested into the country in the form of FDI. This route attracts a lot of incentives, which are: Firstly, enterprises set up through FDI enjoy tax benefits, administrative support, easier access to financial services. Secondly, citizens’ from countries with weak property laws prefer to remove profits from their country and invest abroad to enjoy property rights rather than reinvesting their profits. Thirdly, Round Tripping is often used as an avenue for laundering one’s illegitimate money.   It is due to these reasons that tax havens like Mauritius, the British Virgin Islands, Cayman Islands, Cyprus etc. are used. These places are of immense advantage as money routed through them is exempt from capital gains tax.     Methodology:   Analysis of case studies. Internet web pages and legal websites. Legal journals, reports and opinions.     Limitations:   Round Tripping in itself is a very unregulated and ambiguous phenomenon so the literature available is extremely rare and deficient; therefore this report has drawn inferences from the available material to draw out a viable overview of the entire scenario.   Literature Reviewed/ Bibliography:   The Securities and Exchange Board of India Act, 1992 Articles published in The Hindu newspaper Articles published in The Economic Times newspaper The Law lexicon   Theoretical Framework:   The tussle between the Reserve Bank of India (RBI) and the Revenue Department   Lately it has been observed that the RBI is leaning towards legitimizing certain types of Round Tripping. The RBI’s view on the subject is that money reinvested in India through a foreign subsidiary of an Indian company should be considered foreign direct investment and that in many parts of the world such as China these aspects have already been legitimized. It feels that doing so would boost the FDI count of the country and render it a more attractive destination for foreign investment.   However, the Revenue Department looking from a microeconomic point of view feels that round tripping should not be allowed as Indian companies may use it to evade tax by routing their money through the tax havens. Although in such cases FDI might increase but the country would not benefit in terms of revenue.   The RBI disagreeing with the revenue department’s assessment, cites the Chinese example arguing that where subsidiaries of foreign companies are levied a lower corporate tax, the incidence of round tripping is extremely high i.e. more than 25-30 per cent. However, in India where the corporate tax rates are the same for all companies the incidence of Round Tripping is only 2-3 per cent. It is pertinent to [...]