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Super-rich tax on FPIs: We’ll take it as it comes, says FM

image Finance Minister Nirmala Sitharaman on Monday ruled out any clarification on the surcharge on the super-rich and foreign portfolio investors (FPI), at least for now.

Fears of a higher tax outgo for FPIs was among the reasons for the all-round selling in the bourses in the first trading session after the Budget.

“I don’t think a clarification is required at the moment. We will take it as it comes,” Sitharaman said at the end of a press meet here after the customary post-Budget central board meeting of the RBI.

Interestingly, when asked a similar question on FPI taxation earlier, she had said she would rather give the answer in Parliament.

Also read: Budget impact: Most FPIs stare at 14.25% peak LTCG

Earlier in the day, Central Board of Direct Taxes (CBDT) Chairman PC Mody said the concerns have been brought to the department’s notice. “We will issue a clarification soon,” he said at an Assocham event.

The Budget has proposed a higher surcharge on persons earning more than ₹2 crore. Since it proposes a higher surcharge covering every individual or Hindu undivided family or association of persons or body of individuals, domestic or foreign, there is fear that capital gain taxes on the sale of equity will rise to 21.3 per cent from nearly 18 per cent for short-term capital gain, and to over 14 per cent from nearly 12 per cent for long-term capital gain.

RBI Governor Shaktikanta Das expressed his satisfaction over the government’s move to slash the fiscal deficit target, saying it will help improve investment by the private sector, as the crowding out impact will be lesser. The Budget revised the deficit estimate to 3.4 per cent of GDP, from the 3.3 per cent announced in the interim budget.

Das also said the provision of ₹70,000 crore of additional recapitalisation is a positive development because “it not only enables banks to maintain the capital they need to comply with regulatory requirements, but will also give enough capital to the banks to step up their lending and credit disbursement.”.................BL