New Delhi:The government will soon issue a clarification on 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 some FPIs follow trust structure and hence would be classified as AOPs.
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"The matter has been brought to our notice now. We will issue a clarification soon," Central Board of Direct Taxes (CBDT) Chairman P C Mody said at an Assocham event.
Finance Minister Nirmala Sitharaman in 2019-20 Budget tabled in Parliament last week 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 a 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.