New Delhi, July 21 -- Questions were raised in the Lok Sabha on whether Foreign Portfolio Investors (FPIs) had received preferential tax treatment.

MPs asked if FPIs had been exempted from long-term capital gains (LTCG) tax while domestic and retail investors continued to pay 12.5%, citing concerns over the "worst two-year performance of the Indian equity markets in the world."

The Minister of Finance has now clarified that FPIs have not been exempted from LTCG tax on equity investments.

In a written reply to the Lok Sabha on 20 July, Union Minister of State for Finance Pankaj Chaudhary clarified that "The tax rate of 12.5% on LTCG for domestic and retail investors is the same for FPIs for investments in equity."

He explained that the...