India is likely to exempt foreign portfolio investors from an increase in taxes that was announced in the budget by Finance Minister Nirmala Sitharaman, Reuters reported, citing government sources.
The report said the government would either issue a notification or an executive order, which could be later submitted in Parliament for approval, to exempt the foreign portfolio investors, mainly registered as trusts, from the increase in surcharge on super rich taxpayers.
In the budget last month, Sitharaman proposed to hike taxes on those earning more than 20 million rupees ($282,925.45) annually, a step that rattled many FPIs. Foreign investors took $1.8bn out of Indian equities in July alone.
I am quite open to hear them out what they (FPIs) have to say"
Separately, domestic media said the government was considering reducing tax on long-term capital gains introduced three years ago, as a step to further boost markets.
The government estimates a total revenue loss of 4 billion rupees if it withdraws the higher taxes on foreign portfolio investors, a source told Reuters.
Following the flight of foreign funds from the market, the government said it will soon hold discussions with representatives of foreign portfolio investors.
"I am quite open to hear them out what they (FPIs) have to say," Sitharaman said. Economic Affairs Secretary Atanu Chakraborty would hold discussions with representatives of Foreign Portfolio Investors (FPIs) soon, the finance minister added.