The government has agreed to provide similar tax treatment to Foreign Portfolio Investors (FPIs), as available to foreign institutional investors (FIIs) at present.
In a statement on Tuesday, market regulator Securities and Exchange Board of India (Sebi) said the three categories of Foreign Portfolio Investors - FIIs, sub-accounts and qualified foreign investors (QFIs) - would be given similar tax treatment as available to FIIs currently.
The new rules aim to bring all foreign investors under a common framework, called the Sebi (Foreign Portfolio Investors) Regulations, 2013.
These measures come at a time when the rupee has weakened considerably against the dollar and recently hit its all-time low levels of 60 against the American currency.
Also, FIIs have been pulling out money from the Indian debt market, which has resulted in the hardening of yields on government bonds.
As regards FPI Regulations, "the communication from the Department of Economic Affairs to the CBDT and to Sebi, conveying the decision that all three categories of FPIs would be given similar tax treatment as available to FIIs presently," the regulator said in a statement issued after the board meeting.
Sebi had earlier sought clarity from the Finance Ministry on the issue of taxability of all category of investors.
The committee, headed by former cabinet secretary KM Chandrasekhar, had recommended that "government may consider bringing more clarity and certainty while prescribing the taxation provisions for FPIs".
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