Latest Expert Exchange Queries

GST Demo Service software link: https://ims.go2customer.com
Username: demouser Password: demopass
Get 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) | 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: empanelment :: form 3cd :: ACCOUNTING STANDARDS :: TDS :: ACCOUNTING STANDARD :: list of goods taxed at 4% :: cpt :: due date for vat payment :: VAT Audit :: ARTICLES ON INPUT TAX CREDIT IN VAT :: ICAI offer Get Windows 7,Office 2010 in Rs.799 Taxes :: VAT RATES :: articles on VAT and GST in India :: TAX RATES - GOODS TAXABLE @ 4% :: Central Excise rule to resale the machines to a new company
 
 
News Headlines »
 Notification regarding extension of last date w.r.t submission of closing stock by dealer.
 Integrated Goods and Services Tax (IGST) Rules, 2017 (As on 15.11.2017)
 Central Goods and Services Tax (CGST) Rules,2017 (As on 15.11.2017)
  101st Constitution Amendment Act, 2016
 Pr. Commissioner Of Income Tax-6 Vs. Mccain Foods India Pvt. Ltd.
 Section 10 of the Income-tax Act, 1961
 Income tax returns filing: No tax on gift received from relatives in form of cash
 Income tax returns (ITR): Here is why you need to pay higher tax on other incomes
 GST Update On Issuance Of Debit Notes And Credit Notes
 How Mutual Fund Investments Can Help Save Income Tax
 Income tax returns (ITR) filing: Why small service providers need to get this benefit

Capital gains tax on FIIs may hurt inflows from US, Europe
January, 17th 2007

The recent verdict of the Authority for Advance Ruling (AAR) on two foreign institutional investors Fidelity Advisory and Mathew International asking them to pay tax on short-term capital gains is drawing flak from market watchers.

Sending out a cue to other overseas investors, the AAR, in its ruling, had asked those FIIs investing directly in Indian equity markets to pay 10% short-term capital gains tax on their portfolio investments. This would mean that profits from investment in securities will be treated as capital gains, and not business income. In other words, foreign investors would be liable to pay capital gains tax on off-loading their holdings within one year.

Marketmen feel the ruling would impact investors from the US, Canada and Europe the most. Out of the 1,065 registered FIIs, as many as 409 come from the US and Canada and about 339 from various parts of Europe (including Luxembourg, Netherlands, Ireland, Switzerland France and Denmark). According to Sebi, only 23 and 50 foreign investors have registered offices in Mauritius and Singapore, respectively.

According to market analysts, about 30% of American funds come to India through Mauritius and the remaining portion invests directly into Indian equities. Active FIIs account to only about 11% of the total FII registrations. Though this ruling only has persuasive value, it will only add up tax uncertainties for foreign investors investing in India. FIIs have always been uneasy about taxation procedures in India, said UR Bhat, managing director, Dalton Capital Advisors (India).

In a similar case (also involving Fidelity), AAR had earlier passed a ruling, contradictory to the recent one, wherein the quasi-judicial body had held that profits from Fidelity Advisory Series-8 be considered as business income. The AAR had held that the trading income of this company would be taxable only in the US and not in India as it did not have a permanent establishment (PE) here. 
 
When you have regulations laid out, they should be well-codified and be consistent. We recently saw a classic example in Thailand, in December, when the government regulators decided to put a one-year lock-up on foreign capital. You cant have that kind of inconsistency. Doing so, you are sending a wrong message to foreign investors. Any drastic change such as a tax revision may have some impact, said Rohit Aggarwal, managing director, RAS Capital Management, adding, India is a tax-friendly country.

This particular issue (the AAR verdict) may not have any major impact because we are only talking about investors who are not coming through Mauritius, he said. Talking about the Permanent Establishment (PE) Clause, Mr Aggarwal said, The issue of PE is a bit tricky. There should be some middle-ground between overseas investors and the regulator in this regard. Most market players do not have immediate fears of foreign investors pulling out of the Indian markets. However, many foresee the situation to be a bit edgy once the markets begin to underperform.

Indian tax laws are very unclear. As an FII, we dont pay taxes on capital gains in any other emerging markets other than India. There is always tension among investors whenever there are revisions or changes in policy matters, said a US-based FII on the sidelines of the Ficci Annual Capital Markets conference on Tuesday.

 
 
Home | About Us | Terms and Conditions | Contact Us
Copyright 2017 CAinINDIA All Right Reserved.
Designed and Developed by Binarysoft Technologies Pvt. Ltd.
Desktop Application Development Outsourcing Desktop Application Development Offshore Desk

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