Addressing a press conference, Finance Minister Nirmala Sitharaman Friday announced the rollback of the controversial tax surcharge on the Foreign Portfolio Investment (FPIs), which was announced in the Budget last month.
"The enhanced surcharge levied by Finance Act, 2019 on long and short term capital gains tax is being withdrawn," Sitharaman said during a special media briefing.
The rollback comes after Indian capital markets witnessed massive outflow of foreign funds in the month of July. Since the Budget, the benchmark index, Sensex had fallen over 3,000 points after it touched a life-time high of 40,000.
The decision taken in the Budget to levy enhanced surcharge had spooked the stock markets.
Following the increase in surcharge in the Budget, the effective income tax rate for individuals with a taxable income of Rs 2-5 crore went up to 39 per cent from 35.88 per cent and for those above Rs 5 crore to 42.7 per cent.
Speaking further, the finance minister said India's GDP continues to grow at a faster pace than the global economy and any other major economy.
Addressing the press conference, Nirmala Sitharaman said reform is a continuous process for her government and it tops the agenda.
Global GDP growth may be revised downwards from the current estimate of 3.2 per cent, she said adding that globally the demand was going to be weak. But the Indian economy was growing faster than the global average and all other major economies, Sitharaman added.
Speaking on the US-China trade war and currency devaluation, Finance Minister Nirmala Sitharaman said a volatile situation has developed in global trade as a result.
Echoing Prime Minister Narendra Modi's Independence Day speech talking of respect for wealth creators, she said this was the spirt of her budget for FY20.
Sitharaman said she held consultations with different sectors to understand their needs thereafter.
"We haven't lost reforms momentum," she said.
Watch Finance Minister Nirmala Sitharaman's full press conference