No enhanced surcharge on FPIs for capital gains in equities, derivatives: Govt.

TIL Desk/Business/New Delhi/ The government on Saturday clarified that enhanced surcharge has been withdrawn for foreign portfolio investors on capital gains in both the equity and derivatives segments. The Centre on Friday had announced a slew of measures to boost the economy, including rollback of enhanced super-rich tax on foreign and domestic equity investors imposed in the Budget.

The derivatives (futures and options) are not treated as capital asset and the income arising from the transfer of the derivatives is treated as business income and liable for normal rate of tax for domestic investors, an official statement said on Saturday, clarifying the stand of tax authorities on gains made from derivatives trading.

However, in the case of foreign portfolio investors (FPIs), 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 the Income Tax Act.