Finance

Finance minister Nirmala Sitharaman withdraws higher surcharge on FPIs and domestic investors

Updated : August 23, 2019 07:15 PM IST

Union finance minister Nirmala Sitharaman on Friday announced the rollback of the controversial tax surcharge on the Foreign Portfolio Investment (FPIs) announced in the union budget in February.

"In order to encourage investment in the capital market, it has been decided to withdraw the enhanced surcharge levied by the Finance (No. 2) Act, 2019, the recent budget time on long and short term capital gains arising from transfer of equity or shares and units referred in Sec 111A and section 112A respectively, in other words the enhanced surcharge on foreign portfolio investments (FPI) goes," finance minister said.

The decision taken in the budget to levy enhanced surcharge had spooked the stock markets.

In the 2019-20 budget, the government decided to increase surcharge from 15 percent to 25 percent on taxable income between Rs 2 crore and Rs 5 crore, and from 15 percent to 37 percent for income above Rs 5 crore. It would also be applicable for FPIs operating as trusts or as an association of persons.

Earlier this month, capital market participants and foreign institutional investors presented a charter of demands to Sitharaman, which included a rollback of surcharge on FPIs and review of dividend distribution tax.

Follow our complete coverage of measures announced by finance minister Nirmala Sitharaman here.

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