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: ARTICLES ON INPUT TAX CREDIT IN VAT :: ACCOUNTING STANDARD :: due date for vat payment :: ACCOUNTING STANDARDS :: articles on VAT and GST in India :: list of goods taxed at 4% :: VAT Audit :: TAX RATES - GOODS TAXABLE @ 4% :: form 3cd :: cpt :: empanelment :: Central Excise rule to resale the machines to a new company :: ICAI offer Get Windows 7,Office 2010 in Rs.799 Taxes :: VAT RATES :: TDS
 
 
News Headlines »
 How you can save tax in the last 2 days of current FY
 6 important income tax rules for individuals which will change from April 1, 2017
 Key changes in income tax rates individuals need to look at from 1 Apr
 Provisional Enrollment under Goods and Service Tax (GST)
 Ten income tax changes that will come in to effect from April 1
 New income tax provisions you need to be aware of
 8 benefits you must know about this tax-saving mutual fund
 10 most important income-tax changes which will apply from April 1
 Delhi: 54 CAs, company secretaries on radar in I-T crackdown against black money
 10 Income Tax Rules That Will Change From April. See Details Herea
 Looking for last-minute tax planning with Section 80C investments? Here's help

`Curbs on tax benefits for venture capital funds to harm innovation'
March, 03rd 2007

The Government proposes to restrict the pass through to venture capital funds operating only in half a dozen areas specified by the Government.

The Indian Venture Capital Association (IVCA) has said that the Finance Minister's Budget proposal with regard to the tax pass through provision for venture capital funds will cause irreparable harm to innovation and entrepreneurship in the country. It will discourage the growth of venture capital, which is vital for the myriads of start-ups to achieve their full potential and enable the country's economy to continue its growth rate.

The provision is also unlikely to garner any significant tax revenues as all foreign venture funds will bypass the issue by investing through tax treaty-friendly companies, and the impact will only be on the fledgling domestic venture capital industry, which any way represents only a small fraction of the total investments, Mr Saurabh Srivastava, Chairman, IVCA, said.

Proposals flawed

The Government proposes to restrict the pass through to VC funds operating only in half a dozen areas specified by the Government. This measure is flawed on two counts, according to Mr Srivastava. "First, nowhere in the world does a government seek to be clairvoyant and direct in areas of innovation venture capital is allowed to operate.

This is an issue best left to entrepreneurs and people who are willing to invest in them.

"For example, if the Government had drawn up such a list two decades ago, computer software would not have been on it. This list has some obvious, inexplicable exclusion such as telecom, value-added services in the wireless arena, media, etc.

"But the main point is that no one, certainly not Government, is competent to draw up a list of what are the promising areas of tomorrow.

If the Government's intention was to exclude a specific sector, then that would have been better though not still a good, approach."

Double taxation

The second issue comes from the Government implying that the tax pass through represents some sort of incentive.

The fact is that the pass through only eliminates double taxation.

Worldwide, it is a standard practice that venture capital funds are not taxed twice and considered pass through vehicles, with the tax being paid in the hands of investors.

In fact, in most countries such pass through is routinely available to any pool or group of investors even if they do not represent a registered venture capital fund.

Even in India, any non-corporate vehicle, such as a partnership, is not taxed twice.

"We feel that the current proposals are regressive and retrograde and must be dropped," the IVCA said.

 
 
Home | About Us | Terms and Conditions | Contact Us
Copyright 2017 CAinINDIA All Right Reserved.
Designed and Developed by Binarysoft Technologies Pvt. Ltd.
Binarysoft Technologies - Sitemap

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