Latest Expert Exchange Queries

Make your inventory and invoicing software GST Ready from Binarysoft info@binarysoft.com
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) | Service Tax | Sales Tax | Placements & Empanelment | Various Acts & Rules | Latest Circulars | New Forms | Forex | Auditing | Direct Tax | Customs and Excise | ICAI | Corporate Law | Markets | Students | General | Indirect Tax | Mergers and Acquisitions | Continuing Prof. Edu. | Budget Extravaganza | Transfer Pricing
 
 
 
 
Popular Search: TAX RATES - GOODS TAXABLE @ 4% :: list of goods taxed at 4% :: articles on VAT and GST in India :: form 3cd :: VAT Audit :: ARTICLES ON INPUT TAX CREDIT IN VAT :: due date for vat payment :: Central Excise rule to resale the machines to a new company :: VAT RATES :: ICAI offer Get Windows 7,Office 2010 in Rs.799 Taxes :: empanelment :: cpt :: ACCOUNTING STANDARDS :: ACCOUNTING STANDARD :: TDS
 
 
News Headlines »
 Income-tax (21st Amendment) Rules, 2017
 Deadline for filing income tax return nears; here are 10 common mistakes that you must avoid
 All you need to know about form 26AS
 How to file income tax return?
 7 changes that affect income tax return filing this year
 How To File Income Tax Return (ITR) Online For FY2016-17? Last Date July 31
 Last date for filing income tax return approaches: What is Form 26AS? How it can help you claim refunds
 Income Tax department to launch mobile app to make life easy for taxpayers
 6 things to remember while filing your income tax return
 Want to save on tax? Here are deductions you can use while filing ITR
 July 31 Is Last Date For Filing Tax Return. Why Form 26AS Has To Be Checked

US FIIs to route investment if Obama hikes tax rate
November, 06th 2008

US stocks may have lost their sheen with Indian investors after the global financial crisis. But Indian investors who pick up stocks of US companies when the market revives have nothing to fear, if president elect Barack Obama goes ahead with his plan to hike capital gains tax in the US.

The proposed move will make no difference to these investors. US residents including FIIs and expats will, however, have a higher tax burden if they earn profits from selling shares of US companies. The tax outgo will be more even on profits made from sale of shares listed on the Indian bourses and other exchanges as well.

Currently, individuals and corporations in the US pay a 15% tax on long term capital gains when they sell assets, including shares after holding them for more than a year. Short term capital gains, on assets held for less than a year, are taxed at a higher rate, depending on tax bracket of the investor.

The preferential tax rate on long term capital gains was meant to make investments in shares and other capital assets attractive for investors. In the run-up to the presidential elections, Obama had signalled his intention to create a new top up capital gains rate of 20%. Some reports, however, say the capital gains tax rate could be hiked to 28%.

According to a senior Indian revenue department official, US based FIIs may find it more attractive to route their investments from tax havens such as Cyprus or Cayman Islands if the capital gains tax is hiked.

It is the prerogative of every country to use tax as a tool to gear its economy. Today, investors have many options. At a time when most of the Asian countries are reducing their tax rates, a higher tax rate in the home country would compel the taxable investors in the US to look for tax deferral structures overseas, said Shefali Goradia, partner BMR Advisors.

A hike in capital gains tax, irrespective of the quantum, will not impact Indian investors offloading US stocks when the market revives, says Sudhir Kapadia, partner, Ernst and Young. This is because US does not tax non-residents on capital gains accruing from sale of US stocks. Indians can invest up to $2 lakh a year in assets overseas.

The US, on the other hand, levies a tax on the worldwide income of its residents no matter where they stay. A hike in the capital gains tax rate may hence trigger FIIs to route their investments from tax havens or low tax jurisdictions. US-based FIIs investing in shares listed on Indian bourses are exempt from paying long term capital gains tax. But they have to pay a short term capital gains of 15%.

US investors, in turn, can get a tax credit in the US under the Indo US Double Taxation Treaty. If the investor earns, say $100 as long-term capital gains, he would end up having $85 after paying tax in the US.

His capital gains are being taxed at 15% in the US now. But if US hikes capital gains tax rate, the investor would have to pay a higher tax on his global income. In effect, tax burden would rise for the ultimate investor in the US.

 
 
Home | About Us | Terms and Conditions | Contact Us
Copyright 2017 CAinINDIA All Right Reserved.
Designed and Developed by Binarysoft Technologies Pvt. Ltd.
Content Management System developers CMS developers Content Management Solutions CMS Solutions CMS India Content Management System India CMS development India Website CMS Website Content Management India Portal CMS India CMS Outsourcing CMS Vendor Complete CMS Custom CMS Services

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