Even as the stock market sell-off and FPIs pull out continues, Prime Minister Office (PMO) and Finance Ministry top officials held discussions on Thursday over the suggestions given by the foreign portfolio investors on the surcharge issue, ET Now reported citing unidentified sources. The issue of tax surcharge introduced in this budget by Finance Minister Nirmala Sitharaman was discussed by the PMO with the senior bureaucrats in the finance ministry. The markets are seeing a sharp sell-off by the FPIs since government proposed levy of an additional surcharge on ‘individuals and trusts’ earning more than Rs 2 crore and Rs 5 crore, respectively, following which the FPIs started a mass exodus from the country. The month of July saw the highest outflow since October 2018 with FPIs selling Rs 11,740 crore worth of equities, the data shows.
PMO and Finance Ministry discussed various suggestions and submissions made by FPIs including tweaking if not rolling back surcharge, the report also said. The other suggestions include tweaks in a 1-time tax free transfer of shares to SPVs. There were suggestions of the higher tax only on direct individual beneficiaries’ incomes and self declaration by the FPIs.
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The FPIs even conveyed through the law firms to the Finance Ministry that it was impractical to convert trusts into companies. Finance Minister Nirmala Sitharaman during a discussion on the Finance Bill in the Parliament on July 18 had suggested that the FPIs could consider the option of structuring themselves as companies rather than trusts to avoid paying the increased surcharge.The FPIs also sought roll back as confidence boosting signal from the government.
Meanwhile, after opening lower, the headline indices Sensex and Nifty are trading higher in the latter part of the trading session. At 3:00 PM the Sensex was trading higher by 36 points at 37,055 while the Nifty is trading below 11,000 mark.