Explainer: Will taxing the super rich affect foreign investment inflows?
India TodayThe government’s budget proposal earlier this month to increase taxes on those with annual incomes of more than Rs 2 crore has rattled many foreign portfolio investors. The realisation that the new tax likely applies to the trusts through which many foreign investors put money into Indian financial markets sent stocks plunging last week. The surcharge increases the effective tax rate for most FPIs, set up as Trusts or AOPs, by almost 7 per cent, said Rajesh Gandhi, partner, Deloitte India. Amit Maheshwari, partner at Ashok Maheshwari & Associates, said many countries don’t tax foreign investors on capital gains from listed securities and there is no discrimination against trusts. The proposed rules could hit India’s plans to raise $10-$15 billion through overseas sovereign bonds and its attempts to attract more foreign investment in equities and debt, as many investors may feel reluctant to invest due to uncertainty over tax rates in India.
History of this topic
Govt considers exempting foreign investors from super-rich tax: Report
Live Mint)
Why super-rich sulking over super-hike in tax rates is bunkum; someone ought to foot the bill anyway
Firstpost
$42 billion wiped off Indian stocks as doubts on tax linger
Live Mint
No targeting of FPIs, higher tax on all super-rich, says government
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