Cabinet backs ordinance to ease tax rules for foreign investors in some securities

NEW DELHI: The Union Cabinet on Wednesday recommended an ordinance to ease tax rules for foreign investors in some categories of securities. The details of the proposal moved by the finance ministry were not immediately available. However, it is being seen as an effort to help strengthen the rupee, which has weakened 6% against the US dollar as foreign portfolio investors have pulled out a record Rs 2.6 lakh crore from equities since Jan. The move is likely part of a coordinated action with Reserve Bank of India, which is expected to announce measures on Friday following the monetary policy committee meeting that began on Wednesday. Govt has been seeking to address concerns of various sectors, through measures such as a govt-guaranteed credit line for businesses and a package for exporters, apart from adjustments in duties, including fuel, to insulate the economy from the impact of the West Asia war. But the slide of the rupee and the constant FPI withdrawal from the market has been an area of concern. In the run-up to the Union budget, representatives of FPIs had sought tax changes, including a review of the capital gains tax regime for listed securities, and argued against levy of capital gains tax and securities transaction tax. Tax experts have said that over the years, govt has increased long-term and short-term capital gains tax, while levying STT, which makes investments in India less attractive.