The government will soon issue a clarification on the applicability of increased surcharge on foreign portfolio investors (FPIs), a tax official said on Monday.
There were concerns that the increased surcharge on super-rich could also affect foreign funds investing in India, since a same tax structures apply for individuals, HUFs and Associations of Persons (AOPs).
Experts said that some FPIs follow a trust structure and would be classified as AOPs. “The matter has been brought to our notice now. We will issue a clarification soon,” Central Board of Direct Taxes (CBDT) Chairman PC Mody said at an Assocham event.
In the 2019-20 Budget tabled in the Parliament last week, Finance Minister Nirmala Sitharaman proposed to increase surcharge from 15 per cent to 25 per cent on taxable income between Rs 2-5 crore, and from 15 per cent to 37 per cent for income above Rs 5 crore.
Following the increase in surcharge, the effective income tax rate for individuals with taxable income of Rs 2-5 crore will go up from 35.88 per cent to 39 per cent, and for those above Rs 5 crore, it would go up to 42.7 per cent.
Source: The HinduBusinessLine
