India may quickly roll back an additional levy on foreign funds and announce other measures to boost economic growth, said a government official.
As per the official report, Prime Minister Narendra Modi’s administration is finalizing a package to reverse the economic slowdown and also asking not to be identified as a decision is yet to be announced. Key among them is a likely exemption to foreign portfolio investors from a tax on super-rich announced in the budget.
Finance Minister Nirmala Sitharaman, has a plan to increase the effective tax rate on individuals with a taxable annual income of above 20 million rupees ($283,000) by about 3%, and for those earning above 50 million rupees by 7%. Later this month, plans to exempt Foreign Portfolio Investors, who became an unintended target of the move.
The tax proposal, along with a lack of measures to boost the economy in the July 5 budget, led to foreigners withdrawing more than $3 billion from Indian shares, putting pressure on stocks and the rupee.
FPIs had registered as trusts may consider the option of registering as companies to escape the higher tax, said by Sitharaman. However, the conversion would have required several changes to the tax law.