India currently charges overseas investors a 12.5% tax on long-term listed equity gains and 20% on short-term profits, though Finance Minister Nirmala Sitharaman recently signaled an openness to tax revisions. Foreign funds pulled out over $28 billion earlier this year before pumping back more than $5 billion across the last three weeks. Meanwhile, robust participation from local funds and insurers is providing an annual buffer of up to $80 billion for domestic shares. This solid local liquidity is encouraging Edelweiss Financial Services to prepare an initial public offering for its asset management arm within the next two years.
Key points
Removing capital gains taxes on foreign investors could help maintain recent equity marke…: Removing capital gains taxes on foreign investors could help maintain recent equity market rebounds triggered by lower oil prices.
Domestic mutual funds, pension funds, and insurers are projected to inject $60 billion to…: Domestic mutual funds, pension funds, and insurers are projected to inject $60 billion to $80 billion annually into local stocks.
Edelweiss Financial Services intends to gradually list all of its underlying operations,…: Edelweiss Financial Services intends to gradually list all of its underlying operations, including its asset management and insurance divisions.
Sources checked by our analysis pipeline: 1
India should consider removing the capital gains tax imposed on foreigners to help revive the country’s stock market, Edelweiss Financial Services Ltd. Chairman and Managing Director Rashesh Shah said, adding to a growing clamor for the exemption to boost inflows and support the local currency.
“We need to showcase to the foreigners we want them,” Shah said in an interview with Bloomberg Television’s Menaka Doshi and Haslinda Amin in Mumbai on Friday. “If India wants foreign investors to come back, we want India to be a good permanent allocation for foreigners, we should do something and removing capital gains tax for foreigners might be an easier answer.”
Shah joins dozens who are pushing the government to exempt foreign portfolio investors from paying long-term capital gains tax on listed equities. Finance Minister Nirmala Sitharaman said earlier this week that she will consider tax changes on stocks, but stopped short of confirming whether the government was looking at revisions to capital gains or transaction taxes.
Long-term gains on listed equities held for more than a year are taxed at 12.5%, while short-term…
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