NIFTY 50

CBDT says FPIs, AIFs can opt for a corporate structure to avoid surcharge

Updated : July 11, 2019 07:11 AM IST

The Central Board of Direct Taxes (CBDT) on Wednesday said Foreign Portfolio Investors (FPIs) and Alternative Investment Funds (AIFs) can opt for a corporate structure to avoid paying an additional surcharge.

This comes after FPIs raised concerns that the increased surcharge on super-rich could also affect foreign funds investing in India since the same tax structures apply for individuals, HUFs and Associations of Persons (AOPs).

In an interview to CNBC-TV18, PC Mody, chairman, said, "The consideration was that people who have the higher ability to pay can shell out for the cause of nation-building. Basically, the increase in surcharge was to provide benefit to the lower end."

Union finance minister Nirmala Sitharaman in 2019-20 budget tabled in Parliament proposed to increase surcharge from 15 percent to 25 percent on taxable income between Rs 2-5 crore, and from 15 percent to 37 percent for income above Rs 5 crore.

Following the increase in surcharge, the effective income tax rate for individuals with a taxable income of Rs 2-5 crore will go up from 35.88 percent to 39 per cent, and for those above Rs 5 crore it would go up to 42.7 percent.
primo org
Have you signed up for Primo, our daily newsletter?
It has all the stories and data on the market, business, economy and tech that you need to know.
cnbc two logos
To keep watching CNBC-TV18, India's No. 1 English Business News Channel, call your Cable or DTH Operator and subscribe now for just Rs. 4 per month. You can also subscribe to CNBC-TV18 Prime HD for Re 1/- per month.Find out more
Live TV