THE GOVERNMENT has launched a damage control exercise after the BSE Sensex lost 1,279 points to the bears in the past two days. On Saturday, Finance Minister P. Chidambaram assured foreign institutional investors (FIIs) that there was no move to tax them at higher rate.
Confusing signals from an income-tax department circular had sparked speculations that FIIs would be taxed at higher rate. The confusion over the CBDT circular resulted in FIIs selling heavily in the market.
Chidambaram said: “The circular doesn’t even mention FIIs. Whether an FII is a trader or an investor would be decided by a question of fact. At present, 70 FIIs have declared themselves as traders and declared their income as business income. Some have declared as investors and pay capital gains tax.”
He also ruled out the possibility of re-introducing the long-term capital gains tax and dividend tax -- as demanded by the Left parties. Chidambaram said, “Political parties are free to have their opinions.”
Also, he said there was no proposal to review the double-taxation avoidance agreement with Mauritius.
Re-introduction of long-term capital gains tax ruled out. On the Left’s demand, Chidambaram said: “Parties are free to have their opinions”
Re-introduction of long-term capital gains tax ruled out. On the Left’s demand, Chidambaram said: “Parties are free to have their opinions”