No plan to tax FII fund inflows, says Pranab

India on Friday firmly ruled out taxing foreign capital inflows to the stock market on the lines of Brazil, saying the markets have been functioning normally and do not require such intervention.

"No Sir," finance minister Pranab Mukherjee said in reply to a query by Congress member Manish Tewari, who asked in the Lok Sabha whether the government has any proposals to tax capital inflows to the stock market as Brazil has done.

Brazil recently imposed a two per cent tax on foreign purchases of fixed income securities and equities.

The finance minister said in a written reply during question hour, "The market mechanisms have sufficient resilience and have been functioning normally."

Mukherjee added that inflows through Mauritius contributed 18.74 per cent of the Rs79,343 crore worth of foreign institutional investor (FII) inflows to the Indian equity markets during the first eight months of this fiscal. On the other hand, Singapore's contribution to the total FII inflows was negative at minus 2.5 per cent during the period, he said. This implies that there was more selling than buying from Singapore in the Indian stock markets.

Mukherjee said for granting a certificate as an FII, the Securities and Exchange Board of India takes into account an applicant's track record, professional competence, financial soundness, experience, general reputation of fairness, and existence for a period of at least five years.