Super rich tax - A sapient or a reckless move

In the latest episode of Mint Insight, Mint's Associate Editor Shrija Agrawal discusses the implications of surcharge on FPI's with Siddharth Shah, partner at Law firm, Khaitan and Co. Shah, a veteran lawyer specializing in working with such funds said that the tax surcharge on foreign portfolio investors (FPIs) is sending a wrong signal to a very important class of investors. Incidence of higher tax is secondary, but the move may have a negative impact on the perception of foreign investors that India has a stable regulatory and tax regime – a crucial precursor for attracting more foreign capital and one that we have tried so hard to fortify over the last two years through series of positive decision. It seems that the net economic implications of this decision have not been calculated – higher tax inflows vs higher capital outflows. FPIs operate in multiple jurisdictions, multiple laws and tax regimes – it is not possible to convert into a corporate. Shah finally appeals that Finance Minister takes cognizance of the challenges and an empathetic view of this issue.