Latest Expert Exchange Queries
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: list of goods taxed at 4% :: ARTICLES ON INPUT TAX CREDIT IN VAT :: ICAI offer Get Windows 7,Office 2010 in Rs.799 Taxes :: VAT RATES :: due date for vat payment :: cpt :: VAT Audit :: ACCOUNTING STANDARDS :: Central Excise rule to resale the machines to a new company :: TAX RATES - GOODS TAXABLE @ 4% :: articles on VAT and GST in India :: empanelment :: TDS :: ACCOUNTING STANDARD :: form 3cd
 
 
« News Headlines »
 GST dilemma: Hope fades for new tax regime
 5nance.com launches tax investment platform
 Is government tapping your phone?
 Income tax department to use analytics to look for discrepancies in bank accounts
 GST Council fails to break deadlock over indirect tax regime, next meet on Dec 11 and 12 to hammer out differences
 Invoking Writ Jurisdiction For Income Tax Matters
 How to file income-tax returns online
 How Income Tax Returns Are Scrutinised
 All About New Income Disclosure Scheme to make Demonetisation successful
 Your deposit may draw income tax notice
 Accepting payment under IDS 2016

Tax experts see CBDT circular on securities lending as let-down
February, 28th 2008
The Central Board of Direct Taxess (CBDT) clarificatory circular on taxation issues under the securities lending scheme has been a let-down for many tax experts, who contend that the department has only reaffirmed the existing provisions in law and not thrown light on the real issues that players such as the foreign institutional investors (FIIs) were looking forward to.

Although the CBDT circular has cleared major doubts on taxation issues relating to the lending and borrowing of securities for settlement of securities that are short sold, some tax experts point out that issues such as the taxability of lending charges received by FIIs need clarity.

They also highlighted that the circular remains silent on whether short selling of shares would be considered as speculative transactions or not.

The CBDT has in a recent circular said that transactions of lending and borrowing are not liable to securities transaction tax (STT).

It has also been clarified that lending/borrowing of securities under the securities lending scheme would not amount to transfer and therefore no capital gains would be levied on the lender.

All this circular does is to confirm the existing provisions in law. It has only reaffirmed the law.

FIIs would still have to do their own analysis and take a call. Even without complete clarity on certain taxation issues, I think they would go ahead and take decisions on short selling of securities, Mr Hiresh Wadhwani, Partner, Direct Tax, Ernst & Young India.

Mr Sunil Gidwani, Executive Director, PricewaterhouseCoopers, also felt that taxability of lending charges received by FIIs need clarity.

He also highlighted that the circular did not address the issue of whether profits made by FIIs from short selling would be treated as capital gains or business income (trading profits).

Clarity required

The tests provided in an earlier CBDT circular for making a distinction between an investor and trader cannot be applied in situations of short selling of securities, Mr Gidwani said.

Ms Behrose Kamdin, Director, KPMG said that clarity was needed on whether short selling of shares was a speculative transaction or not.

As the delivery of shares is given in a short sale transaction by resorting to borrowing, the profit earned on a short sale should not be speculative profits, she said.

Moreover, she said that clarity was needed on whether the cost involved on the borrowing of securities should be deducted /added while computing the capital gains /losses arising from short selling.

 
 
Home | About Us | Terms and Conditions | Contact Us
Copyright 2016 CAinINDIA All Right Reserved.
Designed and Developed by Binarysoft Technologies Pvt. Ltd.
Outsourcing Test Solutions Software Testing Software Bug Testing Software Issues Tracking Software Issue Fix Software Code Optimization Database Design Optimization

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