PMO, FinMin discuss tax surcharge impact on market, FPIs; tweaks likely

Prime Minister Office (PMO) and finance ministry’s top bureaucrats on Thursday held discussions over the suggestions and submissions by foreign portfolio investors (FPIs) regarding the surcharge issue, sources told ET NOW on Friday.

The sources said that the PMO took stock of tax surcharge and its impact of the stock market and FPIs.

FPIs have sought roll back of surcharge, as a confidence boosting signal from the Modi government. According to ET NOW, FPIs through law firms have conveyed to the finance ministry that it is impractical to convert trusts into companies. Sources say that PMO may tweak if not rollback surcharge.


The suggestions for tweaks include a one-time tax free transfer of shares to special purpose vehicles (SPVs) and self declaration by FPIs.

There are also suggestions that higher tax be levied only on direct individual beneficiaries' incomes.

There has been a brisk selloff by FPIs after the introduction of an tax surcharge in higher income brackets, which would make many of the overseas portfolio investors to cough up more in taxes.

Data suggests FPIs sold Rs 11,740 crore worth of equities last month, the highest outflow since October 2018.