InvestorQ : Is it true that the government is withdrawing the tax on foreign investors and on long term capital gains?
Arti Chavan made post

Is it true that the government is withdrawing the tax on foreign investors and on long term capital gains?

Answer
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12 months ago


There is no confirmation coming from the government on this front. In the budget presented on July 05th, the finance minister had imposed a much higher surcharge on the super rich income earners who earn more than Rs.2 crore or more Rs.5 crore. However, this had an adverse impact on foreign investors as those FPIs that were structured as trusts were also brought under this ambit. In the last 1 month since the Budget, the FPIs have withdrawn nearly $4 billion from Indian equities and that has had Indian policy makers worried. On Thursday there were indications that the government could reconsider the tax on the income groups. The expectation is that the entire higher surcharge may either be scrapped or the government may choose to specifically make an exception for FPIs under Section 119 of the Income Tax Act.

Long term capital gains is a different ball game altogether. There have been expectations that since the LTCG has not been generating any meaningful revenues, it may be scrapped. If that is done it would be really positive for the markets in the medium to long run in terms of long term sentiments. 




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sara Kunju answered.
12 months ago


The talks are already on for the removal of LTCG from 1 YR to 3 YRS. Also, the FPI tax might be reduced to 20% for FPI.