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 :: ACCOUNTING STANDARDS :: TDS :: TAX RATES - GOODS TAXABLE @ 4% :: articles on VAT and GST in India :: ACCOUNTING STANDARD :: ARTICLES ON INPUT TAX CREDIT IN VAT :: Central Excise rule to resale the machines to a new company :: due date for vat payment :: VAT Audit :: ICAI offer Get Windows 7,Office 2010 in Rs.799 Taxes :: VAT RATES :: list of goods taxed at 4% :: cpt :: form 3cd
 
 
« General »
 Startups that raised funds from angel investors face tax scrutiny
 Tax collection assumptions in India's budget ambitious
 All scrutiny cases, sans search, to be e-assessed
 Key tax changes that will come into effect from April 1
 Eight lakh companies on Income Tax department radar for not filing tax returns
 4 things a taxpayer shouldn’t miss
 Impact on LTCG will be more than 10 per cent
 Here's how much the tax reliefs you want will cost the finance minister
 Companies (Appointment and Qualification of Directors) Amendment Rules, 2018
 How young earners can claim HRA tax exemption with ease
 IT firms eye change in foreign tax credit rule

VCs seek tax exemption across sectors
February, 12th 2010

The Indian Venture Capital Association (IVCA) has asked the finance ministry to extend the benefit of tax pass-through on investments across sectors in the upcoming Union Budget. Currently, under the Finance Act, 2007, tax pass-through benefit has been allowed to investments in only nine sectors information technology, biotechnology, nanotechnology, poultry, dairy, bio-fuels, hotels and hospitality centres, seed research and chemical research & development.

In taxation parlance, a pass-through means an exemption from paying taxes by the exempted group. The tax payable by the group is passed on to the end beneficiary, in this case, the investors or limited partners in these VC funds. Funds investing into non-specified sectors (sectors that do not fall inside the exempted bracket) will have to pay tax (on gains) at every exit.

Through its representation, IVCA has asked the government to do away with sectoral specification and restore tax pass-through benefits across sectors for venture capital funds. The industry body has asked the ministry to treat VCFs (venture capital funds) at par with mutual funds, which are automatically exempted from paying taxes at the pool level.

Non-availability of tax pass-through status could lead to higher taxation of income and, therefore, lower returns for the investors, said Pranay Bhatia, partner, Economic Laws Practice.

If tax pass-through benefit is allowed across sectors, as is proposed under the draft Direct Tax Code, it will alleviate tax interpretation challenges which are currently faced by domestic venture capital funds, Mr Bhatia added.

According to IVCA, tax pass-through for select sectors is causing tremendous hardships to VCFs in terms of uncertain interpretations and operational ambiguity. Moreover, most VCFs are set up in the form of trusts. With pass-through unavailable in sectors other than those specified, these trusts (or VCFs) will be governed by the provisions of trust taxation.

Trust laws according to IVCA are archaic and hold good only for private trusts; the provisions of trust laws are difficult to apply in the context of contributory trusts or pooling vehicles (like VCFs), the industry body said.

Pass-through basis of taxation without sectoral restrictions will resolve several of the current issues in the taxation of VCFs. Such a provision will allow the investors in VCFs to be taxed on income directly without any revenue loss to the government, said Hiresh Wadhwani, partner, financial services, Ernst & Young.

Venture capital experts are asking the government to maintain parity with foreign venture capital funds which are exempted from paying tax in India. Currently, there are 137 Sebi-registered domestic VC funds and 135 foreign venture funds.

 
 
Home | About Us | Terms and Conditions | Contact Us
Copyright 2018 CAinINDIA All Right Reserved.
Designed and Developed by Binarysoft Technologies Pvt. Ltd.
Web Application Development Web based Software Solution Web Application Deployment Web Application Solutions Web Application Software Development Web Application Deployment Web Application Programming Web Application Design and Development

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