CBDT Chairman PC Mody says collateral damage to FPIs over rise in surcharge

In an address with industry members on July 10, Chairman of the Central Board of Direct Taxes (CBDT) PC Mody said that the effect of rise in surcharge on FPIs and SEBI category-III funds is collateral damage.

He suggested that these investors should now opt for a corporate structure. "The other option is to go for corporate structure, I see no differential treatment," he said.

In the Budget 2019-20 tabled last week, Finance Minister Nirmala Sitharaman proposed to increase surcharge from 15 percent to 25 percent on taxable income between Rs 2-5 crore, and from 15 percent to 37 percent for income above Rs 5 crore.

Many foreign portfolio investors (FPIs) are registered as non-corporate entities as trusts or Association of Persons, thus falling under the higher tax bracket.

At a press meet on July 8, the Finance Minister said that "no clarification is required" on the issue of surcharge on FPIs.

Addressing the issue of a rise in tax rates, Mody said that India's tax rates are competitive in comparison to other countries, and that the government cannot keep reducing taxes.

Speaking on the introduction of faceless assessment, he said that the queries raised will move from general to specific queries. He further asked taxpayers to be specific in their replies.