JOIN USIn order to attract foreign capital, the finance ministry may cut long-term capital gain tax from 20 per cent to 10 per cent on investments made by private equity funds into shares of unlisted companies.
“For PEs investing in unlisted securities currently they are charged higher rate of tax than FIIs. So they have requested to being them at par with FIIs. Let us see,” Finance Secretary R S Gujral said.
As per the provisions of the Finance Bill 2012, while FIIs pay a long-term capital gain tax of 10 per cent for investment in unlisted securities, private equity (PE) investors pay 20 per cent. For listed securities, however, there is no tax on long-term capital gains.
Experts, however, said if the tax structure of the PEs is relaxed that would help them exit their investment in India without worrying much on the tax payout.