The official said, “Some relief for FPIs on higher surcharge may be announced soon. We are trying to build consensus on relief for FPIs surcharge issue.”
The government is likely to come up with an announcement to provide some relief to FPIs and the NBFC sector.
A senior government official told Moneycontrol that the government is aware of the issue of surcharge on foreign portfolio investors (FPIs) and it is building a consensus on the issue.
The official said, “Some relief for FPIs on higher surcharge may be announced soon. We are trying to build consensus on relief for FPIs surcharge issue.”
In her maiden budget, Finance Minister Nirmala Sitharaman had proposed raising surcharge on the super-rich. This surcharge also increased the tax burden on FPIs as most are organised as non-corporate entities such as trusts and associations where taxation is similar as for individuals.
The announcement made way for the bears to take hold of the market as the average market capitalisation of the BSE-listed companies fell from Rs 151.35 lakh crore on budget day, to Rs 138.37 lakh crore on August 5, wiping out Rs 12.98 lakh crore.
Some relief measures on sectors like the non-banking financial companies (NBFCs) would be announced by the government soon, the official said.
The official also said that relief for NBFCs along with measures announced by the Reserve Bank of India (RBI) for NBFCs are expected to have a multiplier effect on the economy.
On August 7, in its monetary policy, the RBI announced the setting up of a central payments fraud registry to track the systems for frauds and increasing exposure limits for lending banks to single NBFCs to 20 percent. The previous limit was 15 percent of the bank’s Tier-I capital.
The RBI also said that to boost credit flow to certain priority sectors, bank lending to registered NBFCs for on-lending to agriculture (investment credit) up to Rs 10 lakh; micro and small enterprises up to Rs 20 lakh; and housing up to Rs 20 lakh per borrower will be classified as priority sector lending.
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