No one likes to see a tax demand dropping on to the mat, but in India it comes with a special sense of dread. Foreign businesses such as Vodafone and Cairn Energy know the agonies that come with protracted battles with the country’s revenue service. Now it seems global fund managers might be next.

Until a few months back, only a handful of tax nerds had heard of India’s minimum alternative tax (MAT), a levy that ensures domestic businesses must hand over a basic portion of profits. That was until some bright spark found a regulatory ruling from 2012, implying that foreign institutional investors might suddenly be liable, despite never having had to pay it before.

Over recent weeks demands have begun arriving at about 100 international funds. Many more of the 6,000 that invest in India could now be hit. Tax experts are peeved, arguing no other country charges foreign equity investors this sort of tax. Fund managers, needless to say, are not best pleased either.