Nirmala Sitharaman
Union finance minister Nirmala Sitharaman

In breather for the markets, the central government has decided to withdraw the higher tax surcharge on foreign portfolio investors (FPIs).

Union finance minister Nirmala Sitharaman on Friday announced the roll back of the controvertial tax surcharge on the FPIs announced in the Budget last month.

“The enhanced surcharge levied by Finance Act, 2019 on long and short term capital gains tax is being withdrawn,” Sitharaman told reporters in New Delhi.

The rollback comes after Indian capital markets witnessed massive outflow of foreign funds in the month of July.

Since the Budget, the benchmark index, Sensex had fallen over 3,000 points after it touched a life-time high of 40,000.

Indian markets are down about 10% from their June highs after finance minister Sitharaman announced higher surcharge on FPIs.

In the 2019-20 Budget, the government had increased surcharge from 15% to 25% on taxable income between ?2 crore and ?5 crore, and from 15% to 37% for income above ?5 crore.

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