Business

Government Scraps Higher Surcharge On Foreign Investors

Government Scraps Higher Surcharge On Foreign Investors

Finance Minister Nirmala Sitharaman on Friday announced the government's decision to scrap the higher tax surcharge on foreign portfolio investors (FPIs). “The enhanced surcharge on FPI goes, in simple words,” Ms Sitharaman said, referring to a budget proposal pertaining to Foreign Portfolio Investors. “In other words, the pre-budget position is restored.”

The rollback of higher surcharge on foreign portfolio investors came after capital market participants and foreign institutional investors earlier this month presented a charter of demands to Finance Minister Nirmala Sitharaman, which included rollback of surcharge on FPIs, review of dividend distribution tax and lowering of LTCG tax, in a bid to shore up investors' sentiments.

Meanwhile, Finance Ministry also decided to withdraw enhanced surcharge on short and long term capital gains arising from transfer of equity shares.

"In order to encourage investment in the capital market, it has been decided to withdraw the enhanced surcharge levied by Finance Act, 2019 on long/short term capital gains arising from transfer of equity shares/units referred in section 111A and 112A," Finance Ministry said in a presentation.

Following the implementation of higher surcharge, foreign portfolio investors sold shares worth Rs 12,418.73 crore in the month of July.

The equity markets also witnessed sharp declines after the government announced imposition of higher tax surcharge on FPIs. Since the Budget day, the Sensex has fallen 8 per cent and the Nifty has plunged 9.35 per cent.



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