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: cpt :: due date for vat payment :: Central Excise rule to resale the machines to a new company :: list of goods taxed at 4% :: TAX RATES - GOODS TAXABLE @ 4% :: VAT RATES :: form 3cd :: VAT Audit :: TDS :: ARTICLES ON INPUT TAX CREDIT IN VAT :: articles on VAT and GST in India :: ACCOUNTING STANDARD :: ACCOUNTING STANDARDS :: empanelment :: ICAI offer Get Windows 7,Office 2010 in Rs.799 Taxes
Direct Tax »
 Deadline For Income Tax Returns Filing Only 12 Days Away. 10 Points
 Income Tax: E-assessment ensures greater efficiency in the taxation system
 10 Points Deadline For Income Tax Returns Filing Only 2 Weeks Away.
 Income tax returns (ITR) filing: A step by step guide to check your ITR status online and offline
 How to save tax; amazing tips to make your money stay in your wallet Income tax returns (ITR) filing
 Want to save tax? Here are the best options
 Suggestion For Option To Assessee For Higher And Lower TDS/TCS For Optimization Of Tax Collection And Refunds
 CBDT to conduct nationwide review of tax collection for FY18 today
 Here are a few last-minute tax saving ideas Not planned taxes yet?
 Confessions of a fake CA exposes lacuna in e-filing of tax return
 Greetings from the income tax department

No tax on redemptions and bonus units, CBDT clarifies
February, 17th 2014

Tax authorities were demanding AMCs to pay tax on redemptions and on issue of bonus units.

In a relief to fund houses and investors, the Central Board of Direct Taxes (CBDT) has clarified that AMCs won’t have to pay any tax on redemptions and on issue of bonus units.

Tax authorities were demanding AMCs to pay additional income tax under sub-section (2) to section 115R of the Income Tax Act on payment made to investors at the time of redemptions and issue of bonus units to investors.
"Mutual funds have to pay tax before declaring dividends. The tax authorities went a step further and asked some AMCs to pay tax before paying redemption proceeds to investors. Similarly, in the case of bonus units, bonus is converted as income and issued to investors. The CBDT had asked AMCs to pay tax on bonus units also. The industry had made a representation to CBDT on the same," said Jimmy Patel, CEO, Quantum Mutual Fund.

“Sub-section (2) of section 115R of the Act provides that any amount of income distributed by (i) a specified company or (ii) a mutual fund to its unit holders shall be chargeable to tax and such entities shall be liable to pay additional tax on such distributed income at the rates prescribed therein. The income so distributed by such entities is the dividend paid to unit holders and is liable to tax under this section. However, redemption of units would not attract levy of tax under sub section (2) to section 115R of the Act as such income is not of the nature of ‘income distributed’ to unit holders and hence lies outside the purview of this section,” said a CBDT circular issued on February 11.

CBDT clarified that issue of bonus units is akin to distribution of income by way of dividend and is hence exempted from paying any additional income tax.

Bonus units are issued to existing unit holders as a way to reward them. Unlike dividends where investors get money, bonus units result in additional units being created in the fund. Not many fund houses give bonus units to investors any more.

In another case, Central Board of Direct Taxes (CBDT) had earlier asked some AMCs to cough up income tax for investment made in pass through certificates (PTC) in year 2008-2009

Home | About Us | Terms and Conditions | Contact Us
Copyright 2018 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