The government is considering to give relief to foreign portfolio investors which are currently facing heat of a higher surcharge introduced in the Budget, according to a government official.
The Budget proposal to raise surcharge on individuals earning Rs 2-5 crore and above included foreign portfolio investors and alternative investment funds as they are registered as non-corporate entities. This spooked investors and triggered a selloff in the market. FPIs have pulled out over Rs 20,500 crore from the market.
The relief for foreign investors is expected to be announced soon, the official cited earlier said.
The government may exempt foreign portfolio investors from additional surcharge, Reuters reported citing two unnamed sources.
If the government decides to exempt FPIs from additional surcharge, it could be done through a clarification, said another official. However, to officially enable the change, the Finance Act will have to be amended retrospectively in the next budget, or the government can move an ordinance.
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