Latest Expert Exchange Queries

GST Demo Service software link:
Username: demouser Password: demopass
Get your inventory and invoicing software GST Ready from Binarysoft
sitemapHome | Registration | Job Portal for CA's | Expert Exchange | Currency Converter | Post Matrimonial Ads | Post Property Ads
News shortcuts: From the Courts | News Headlines | VAT (Value Added Tax) | Placements & Empanelment | Various Acts & Rules | Latest Circulars | New Forms | Forex | Auditing | Direct Tax | Customs and Excise | ICAI | Corporate Law | Markets | Students | General | Mergers and Acquisitions | Continuing Prof. Edu. | Budget Extravaganza | Transfer Pricing | GST - Goods and Services Tax
Popular Search: Central Excise rule to resale the machines to a new company :: form 3cd :: ACCOUNTING STANDARD :: articles on VAT and GST in India :: VAT RATES :: TDS :: due date for vat payment :: ACCOUNTING STANDARDS :: VAT Audit :: ARTICLES ON INPUT TAX CREDIT IN VAT :: empanelment :: ICAI offer Get Windows 7,Office 2010 in Rs.799 Taxes :: list of goods taxed at 4% :: TAX RATES - GOODS TAXABLE @ 4% :: cpt
News Headlines »
 Tax Return Preparer (Amendment) Scheme, 2018
 Tax-saving for young earners simplified
 How to save income tax? Here are 6 investments with tax free income
 10 Top salary deductions that can save tax for you
 What are the tax saving options beyond Section 80C?
 The penalties for not paying tax on time
 How to make your salary tax efficient
 I-T Department may go into overdrive this quarter
 Ways to reduce the TDS deduction from your salary
 4 Tips for choosing who prepares your 2017 Tax Returns
 Processing of income-tax returns under section 143(1) of the Income-tax Act which were filed in Forms ITR-1 to 6 & applicability of section 143(1)(a)(vi)

Financial turmoil and its tax implications
October, 24th 2008

What has been described as once in-a-generation global crisis is likely to leave its mark across sectors, though more prominently on the banking and financial services sector. India, being a relatively shielded economy, has been spared much of the more direct brunt of this turmoil.

The swift response of the policymakers and their ability to leverage this global crisis and turn the tides of global wealth in favour of India could re-define the growth story of India for the next decade.

While the financial sector the world over is in a restructuring mode, counter intuitive propositions are being formulated by different sets of players as they consider the battle scarred landscape for opportunities to mine. Headhunters may witness a short term surge in activities as individuals displaced by the ongoing crisis are placed into new homes.

Bankruptcy lawyers are stretched as they represent various creditor groups as well as failing institutions. Financial market players, who have been less afflicted by the ongoing developments are looking at opportunities to acquire teams and businesses at fire sale prices.

Tax will undoubtedly follow suit. While tax advisors around the world apply their minds to optimising client tax positions in the aftermath of the crisis, revenue authorities will be preparing to review the tax positions that companies will adoptwhether such companies represent failed enterprises , or those that have survived and grown from the crisis through strategic acquisitions.

The foremost issue would be the tax deductibility of the write-offs on account of bad loans. The period of accrual of the losses, whether the losses have actually been crystallised or merely represent accounting provisions could potentially increase the gap between accounting profits and tax profits.

Another issue that could arise in the Indian context would be that pertaining to tax holidays. A number of banks and financial institutions have set up offshore units in India either as software technology park units or as special economic zone units. It is likely that some or more of these units may now find new owners.

The continuity of the associated tax holiday is clear when these units are transferred under a scheme of merger or demerger. However, given that both mergers and demergers require court approvals and involve a fairly length process, an acquisition of assets either on a standalone or a going concern basis appears more practical and attractive .

While the intent in law has been for the tax holiday benefits to pass on with the undertakings, the law is not entirely clear and could give rise to some uncertainty or litigation. Lastly, the ghost of the Vodafone issue would pose a potential threat.

In some instances, where the ownership of financial institutions changes hands at the global level, the question would remain as to whether the value assigned to the Indian business should be liable to Indian capital gains tax.

This could have an adverse impact as in all probability, the overall business may be sold at a loss although the Indian business, which may not be affected by the global crisis, may be more valuable. Shelling out tax on notional gains in such a situation could aggravate the pains that institutions are already experiencing.

Home | About Us | Terms and Conditions | Contact Us
Copyright 2018 CAinINDIA All Right Reserved.
Designed and Developed by Binarysoft Technologies Pvt. Ltd.
Binarysoft Technologies - Careers

Transfer Pricing | International Taxation | Business Consulting | Corporate Compliance and Consulting | Assurance and Risk Advisory | Indirect Taxes | Direct Taxes | Transaction Advisory | Regular Compliance and Reporting | Tax Assessments | International Taxation Advisory | Capital Structuring | Withholding tax advisory | Expatriate Tax Reporting | Litigation | Badges | Club Badges | Seals | Military Insignias | Emblems | Family Crest | Software Development India | Software Development Company | SEO Company | Web Application Development | MLM Software | MLM Solutions