Foreign Portfolio Investors (FPIs)

Why is it in the news?
  • The Budget 2019-20, tabled in Parliament last week proposed to impose surcharge of 3% on taxable income between Rs 2 crore and Rs 5 crore, and 7% for income above Rs 5 crore.
More in the news
    • The proposed surcharge on super rich in the recent budeget has taken a toll on foreign investors in the Indian capital market.
    • A large number of foreign portfolio investors (FPIs) in India operate through a trust or a limited liability partnership (LLP) structure.
    • The trusts and LLPs are not recognised as a corporate entity by the Income Tax Act and hence, are taxed as per the individual tax slabs.
    • The proposed tax regime is likely to hurt non-corporate FPIs as well as several domestic funds.
    • FPIs:
      (1) It is investment by non-residents in Indian securities including shares, government bonds, corporate bonds, convertible securities, infrastructure securities etc.
      (2) The class of investors who make investment in these securities are known as Foreign Portfolio Investors.
      (3) Any equity investment by non-residents which is less than or equal to 10% of capital in a company is portfolio investment. While above this the investment will be counted as Foreign Direct Investment (FDI).
      (4) NRIs doesn’t comes under FPI.
      (5) Foreign Portfolio Investors includes investment groups of Foreign Institutional Investors (FIIs), Qualified Foreign Investors (QFIs) and subaccounts etc.
          Source
          The Hindu.




          Posted by Jawwad Kazi on 9th Jul 2019
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