July 2019 India Union Budget 2019 – Update on surcharge for FPIs
The Hon'ble Finance Minister of India Ms. Nirmala Sitharaman had presented the Union Budget 2019 in the Parliament on 5 July 2019. One of the key tax announcements was an increase in the rate of
surcharge on tax applicable for a specific taxpayer category viz. individuals, Association of Persons (AoP), Artificial Juridical Persons (AJP) where the taxable income exceeds prescribed monetary thresholds.
The increased surcharge would also apply to FPIs that are registered, for India tax purposes, under the above categories. A number of representations were made to the Government by industry bodies and investor associations to roll back the increased surcharge levy for FPIs.
The Finance Minister presented the amendments to the Finance Bill, 2019 in the Lok Sabha - lower house of the Parliament yesterday. As per information available, there are no amendments or changes in relation to the increased surcharge on tax for FPIs. The Finance Bill has been passed by the Lok Sabha.
Passage of the Finance Bill by the Lok Sabha, completes a significant part of the Legislative process.
While the Finance Bill still needs to be passed by the upper house of the Parliament - Rajya Sabha and receive Presidential assent before it becomes law, it now seems unlikely that there would be a roll-back of the increased surcharge rates. The revised tax rate shall be effective from 1 April 2019 and will apply for the entire financial year i.e. 01 April 2019 to 31 March 2020.
The impact in the tax rate due to hike in surcharge is summarised in the table below:
Particulars Current rate (income >
INR 10 million) Proposed rate (income between INR
20 million - 50 million) Proposed rate (income >
INR 50 million)
LTCG (10%) 11.96% 13.00% 14.25%
STCG (15%) 17.94% 19.50% 21.37%
STCG (30%) 35.88% 39.00% 42.74%
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PwC TRS Team About PwC
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