No point unsettling system, FPIs should accept current taxation: Sebi chief

Sebi Chairman Tuhin Kanta Pandey on Saturday said there is no point unsettling the current taxation, and the foreign portfolio investors need to "live with" the system.

Pandey, who took over as the Sebi chief three weeks ago, also said some companies are making "blatantly false disclosures" and the capital markets regulator does not "hesitate" to act against such malpractices.

On the issue of taxation, Pandey listed out a slew of advantages which India -- the fastest growing large economy in the world -- offers, including delivering superior returns, stable policy environment and inflation being under control.

"If some certainties have already come in terms of taxation, let us not unsettle it," he said, listing out positives with India like delivering over 11 per cent per annum returns on the MSCI over the last five years, fastest growing large economy, stable inflation, and fiscal consolidation.

Consumption is picking up, and there is an upswing in capital formation both by the government and private companies, he said, while speaking at the Business Today Mindrush 2025 event here.

Pandey said the tax system has actually responded to the problems of these investors and facilitated moves even in the latest Budget.

There were concerns of FPI pullouts after a government clarification declaring that FPIs will have to pay long-term capital gains tax at 12.5 per cent from April 1 as against the earlier rate of 10 per cent.

The FPIs segment has seen outflows in 2024, a trend that is being attributed to global events.

The career bureaucrat-turned-regulator said materiality should decide the level of disclosures, and added that the Industry Standards Forum (ISF) constituted by Sebi has defined the same and frequency of making the disclosures.

"There are corporate disclosures (where) there are malpractices... there are blatantly false disclosures being made. We will not hesitate in taking actions against such disclosures," he said.

Sebi's surveillance system is throwing out details of the entities indulging in such wrongful disclosures, he said.

On the issue of taxation and the regime's impact on the FPI interest in the Indian markets, Pandey seemed to suggest that the investor community should not expect any change.

There is a need to look at volumes in the derivatives segment in a nuanced way, Pandey said, adding that notional interest can sometimes be misleading.

The metrics of measurement have to change, and Sebi will be addressing the same in a new regulation, which it will come out with.

"We also need to change from a system where only the large, organised investors are making money and the retailers are losing," he added.