On Monday, Finance Minister Nirmala Sitharaman said that the government is open to hear concerns of Foreign Portfolio Investors (FPIs).
"Want to make it absolutely clear that I am open to hearing out FPIs," she said following her meeting with the chiefs of public sector banks to take stock of their financial situation. She said that a meeting between the government and the stock representatives will be soon held. The Economic Affairs Secretary will be meeting the FPIs directly soon.
In the Budget 2019, Finance Minister Nirmala Sitharaman had proposed a higher surcharge on those earning over Rs 2 crore. Since the tax implications cover individuals or HUF or association of persons or body of individuals (domestic or foreign), the tax impact on profit from sale of equity rose to 21.3 percent from 18 percent for short-term capital gains, and to over 14 percent from 12 percent for long-term capital gains.
It was said that the higher surcharge would impact FPI who fall in the individuals, associations of persons or trust and not those in the corporate structure.
FPIs, through their law firms, had conveyed to the Finance Ministry that it would be impractical for them to convert trusts into companies for a tax advantage.
On the first two trading days of August alone, Rs 2,632.58 crore was withdrawn from equities and Rs 248.52 crore from the debt segment.