New Delhi [India], Aug 24 (ANI): In a major relief to foreign portfolio investors (FPI), the government on Friday announced to scrap the enhanced surcharge on long and short-term capital gains arising from the transfer of equity shares. "In order to encourage investment in the capital market, it has been decided to withdraw the enhanced surcharge levied by Finance (No. 2) Act, 2019 on tax payable at special rate on income arising from the transfer of equity share/unit referred to in section 111A and section 112A of the Income-tax Act from the current FY 2019-20," the government said in an official release.It said that the surcharge increase is removed for both domestic and foreign investors, restoring to the pre-budget position."In the case of Foreign Institutional Investors (FPI), the derivatives are treated as capital assets and the gains arising from the transfer of the same is treated as capital gains and subjected to a special rate of tax as per the provisions of section 115AD. Therefore, it is also decided that the tax payable on gains arising from the transfer of derivatives (Future and options) by FPI which are liable to a special rate of tax under section 115AD shall also be exempted from the levy of the enhanced surcharge," it said. "Therefore, the enhanced surcharge shall be withdrawn on tax payable at special rate by both domestic as well as foreign investors on long-term and short-term capital gains arising from the transfer of equity share in a company or unit of an equity-oriented fund/business trust which are liable for securities transaction tax and also on tax payable at special rate under section 115AD by the FPI on the capital gains arising from the transfer of derivatives," it added. Earlier in the day, Finance Minister Nirmala Sitharaman addressed a press conference to announce a slew of measure to boost the economy."This is only a start of measures. More moves to stimulate the economy will be announced by the middle of next week," she said.The tax payable at the normal rate on the business income arising from the transfer of derivatives to a person other than FPI shall be liable for the enhanced surcharge, it said.The impact of rollback of enhanced tax surcharge will be about Rs 1,400 crore. The minister also promised a review of enhanced surcharge on high net worth individuals in 2022 when the country celebrates the 75th anniversary of Independence. (ANI)

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