Super-rich tax surcharge on FPIs rolled back, announces Nirmala Sitharaman
The finance ministry had increased the effective tax rate on individuals with taxable annual income of above Rs 2 crore rupees by about 3%, and for those earning above Rs 5 crore by 7%.Updated: Aug 23, 2019 21:04 IST
Finance Minister Nirmala Sitharaman on Friday announced a rollback of enhanced surcharge levied on foreign portfolio investors as part of a slew of measures to boost growth.
The finance ministry had increased the effective tax rate on individuals with taxable annual income of above Rs 2 crore rupees by about 3%, and for those earning above Rs 5 crore by 7%.
Foreign Portfolio Investors had become the unintended target of the higher surcharge on the super rich and was widely seek to have contributed to foreigners withdrawing more than $3 billion from Indian stocks.
News of the finance minister’s press conference had, much before the announcement was made, snapped stocks out of its three-session falling streak on expectations that she could announce withdrawal of the surcharge and announce steps to support the sagging economy.
“In order to encourage investment in the capital market, it has been decided to withdraw the enhanced surcharge levied by Finance (no. 2) Act, 2019 on long and short term capital gains arising from transfer of equity shares/units referred to in section 111A and 112A respectively,” Sitharaman told reporters at a briefing on measures for boosting economic growth.
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The minister said that the surcharge increase is removed for both domestic and foreign investors and the pre-budget position had been restored.
Sitharaman, who also announced a bouquet of steps to make it easier, simpler and cheaper for businesses to operate, had started the media briefing by underscoring that the Indian economy was doing much better than other economies, both among developed countries as well as emerging markets.
She also pledged that the government would continue with the reforms.
She said the global GDP was projected at 3.2 per cent and India is placed in a better position than many developed countries like the US and Germany.
The weak demand globally points to lowering of consumption.
Her comments came as Moody’s Investors Service lowered India’s GDP growth forecast for the calendar year 2019 to 6.2 per cent from its previous estimate of 6.8 per cent.
Sitharaman said that the government was committed to the reform agenda and has several steps for ease of doing business including of labour reforms.