NEW DELHI, May 19 (UPI) -- India is reeling from the largest ever free-fall of Mumbai's Sensex, apparently triggered by reports some foreign investors may be taxed on their stocks.
Mounting fears among investors prompted Finance Minister P. Chidambaram to step in and announce that the draft was merely a discussion paper, but Mumbai's stock market continued to plummet all day.
"No (foreign institutional investor) has been assessed as a trader because they have no permanent office in India," he said, attributing the panic to uninformed media reporting.
With the Sensex down over 1300 points, critics of Indian tax policy say the state of panic may drive foreign investors away.
Leftist party leaders in New Delhi announced Friday evening that the draft was intended simply to distinguish between a trader and an investor.
India currently has no long-term capital gains tax, or taxes on dividends. However, there have been renewed calls from within the government for long-term capital tax to be returned.
