Finance Minister Nirmala Sitharaman on Friday rolled back a higher surcharge levied on domestic and foreign investors in the equity market and announced a slew of other measures to boost economic growth in the country.
Sitharaman said the enhanced surcharge on long and short-term capital gains has been withdrawn. “In other words, the pre-Budget position is restored,” she said.
The finance ministry during the Budget on July 5 had proposed to increase the surcharge on individuals having a taxable income above Rs 2 crore, a step that rattled many Foreign Portfolio Investors. After the government’s move, FPIs have pulled out over $1 billion in August from the Indian markets, Reuters reported.
Sitharaman also addressed concerns over alleged harassment of taxpayers. She said from October 1, all notices, summons, and orders of the Income Tax Department would be issued through a centralised computer system and would also have a a computer-generated unique Document Identification Number.
The government’s announcements are aimed at improving private investment and assuaging concerns of portfolio investors in the country.
Members of the Prime Minister’s Economic Advisory Council have sounded warnings about the economy. Shamika Ravi, who is also the research director of the Brookings India think tank, on Friday said the country was facing a structural slowdown. She added that many ministries need to follow “a national growth strategy with time-bound goals”.
Ravi’s statement came a day after NITI Aayog Vice Chairperson Rajiv Kumar said extraordinary steps were needed to deal with an unprecedented crisis in the financial sector. He said the government needed to encourage the private sector to invest, and eliminate apprehensions about policies in the minds of private players.
Economic growth slipped to a five-year low of 5.8% in the January to March quarter. This was the slowest pace of growth in 17 quarters. A number of economists have also raised questions about the methodology of assessing official growth numbers. In recent weeks, the automobile sector and biscuit makers have reported a slowdown in sales. Steelmaker JSW Steel has also said the industry may be forced to cut its production in the future because of falling consumer demand.
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