The higher tax on India's super rich continues-- only the capital gains are exempt
- Foreign investors had pulled out billions from India's equity market ever since the tax surcharge was announced in the latest budget.
- The Narendra Modi government also announced a slew of measures including tax reforms to revive a sluggish economy.
Finance Minister Nirmala Sitharamanand her team addressed a press conference to restore the faith in the economy and the government.
- Reform is a continuous process, she said in her opening remarks.
The benefit of the rollback is not available to the high net worth individuals. They will continue to pay the additional surcharge. However, the Finance Minister said that the government will review the decision in 2022, the seventy-fifth year of Indian independence.
The latest budget for the financial year ending March 2020 imposed an additional tax on the country's super rich and foreign portfolio investors (FPIs) got caught in the crossfire. The subsequent anger and market sell-off has wiped off billions of rupees in share market wealth since then as foreign investors rushed for the exit.
Most foreign portfolio investors in India operate as non-corporate entities such as trusts and associations, which are taxed like individuals and therefore the additional tax would fall on them.
The government will lose ₹1,400 crore by rolling back the additional surcharge imposed in the latest budget. For now, the capital gains on trading of shares by foreign and domestic investors will be exempt but the country's super rich will continue to pay the additional levy on their total taxable incomes.
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