MUMBAI: India has proposed tax ​law amendments to shield offshore ​investment funds from Indian tax liabilities when they route investments through ​India-based fund managers, a draft bill showed.The proposed change comes as the country faces significant foreign outflows, prompting the government to take measures to attract overseas investors by easing access. Investors ‌have long complained ⁠about aggressive ⁠tax administration in India.Also Read| SBI, HSBC and ICICI lead India's overseas deposit drive, data showsThe government described the new rules as being framed "in order to promote ​fund management activity and provide tax certainty."An email query sent to India's finance ministry was ​not answered immediately.Under the existing rules, an offshore fund must maintain a minimum corpus of 1 billion Indian rupees ($10.49 million), have at least 20 investors, and cap ​any single investor's contribution at 25% in order to ⁠be shielded ‌from Indian tax. Funds that fail to meet these conditions ​risk having ​their India-sourced profits taxed at rates of up to 38%.The new ⁠bill proposes removing all minimum size and diversification requirements under the safe harbour rules, meaning offshore funds - regardless of their asset base or investor concentration - could use Indian fund managers without triggering a tax liability, provided the bill is passed by parliament."By replacing a highly prescriptive regime with a far simpler substance-based framework, the government has substantially reduced the risk of offshore funds being regarded as having a 'business connection' in India - and thus ‌taxable - merely because their investment manager is located here," said Girish Vanvari, founding partner of Transaction Square, a business and tax advisory ​firm in India. The ​proposed rules have ⁠retained some safeguards such as not more than 5% of the fund's assets can be from domestic investors, and the fund cannot control business in India to ​be exempt from Indian tax exposure.Also Read| India proposes extending tax breaks for contract manufacturing in a boost for AppleNehal Sampat, a partner at PricewaterhouseCoopers, said offshore funds had previously struggled to comply with the safe harbour conditions when appointing onshore managers."This is a significant ease-of-doing-business measure, and it will provide a fillip to offshore funds to hire onshore managers," he said.