MUMBAI, June 4 (Reuters) - India plans to scrap capital gains tax on investments in government securities by foreign portfolio investors (FPIs), the Economic Times reported on Thursday, citing sources.
The plan is part of efforts to draw capital flows into India, amid pressure on the South Asian nation's currency.
Reuters could not independently verify the report. An email to the federal finance ministry went unanswered.
Here are more details from the report:
o Cabinet meet on Wednesday approved the scrapping of capital gains tax on foreign portfolio investment in government bonds.
o Decision likely to be implemented via an ordinance amending Income Tax rules.
o Foreign investors currently pay 12.5% long term capital gains tax on listed shares and bonds held for more than 12 months.
o They also pay 20% withholding tax on interest earned in government bonds. This may be removed as well.
o Foreign investors have maintained net positive flows into Indian government debt this year, investing a net amount of $1.4 billion, while nearly $28 billion has been pulled from equity markets.
(Reporting by Ira Dugal; Editing by Ronojoy Mazumdar)
