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: due date for vat payment :: empanelment :: form 3cd :: TAX RATES - GOODS TAXABLE @ 4% :: list of goods taxed at 4% :: VAT Audit :: Central Excise rule to resale the machines to a new company :: ICAI offer Get Windows 7,Office 2010 in Rs.799 Taxes :: ACCOUNTING STANDARDS :: articles on VAT and GST in India :: TDS :: ACCOUNTING STANDARD :: VAT RATES :: cpt :: ARTICLES ON INPUT TAX CREDIT IN VAT
 
 
News Headlines »
 Income-tax (17th Amendment) Rules, 2017
 GST: One nation, one market, one tax
 Ready or not, businesses brace for biggest-ever tax reform
 Ready or not, businesses brace for biggest-ever tax reform
 Make your inventory and invoicing software GST Ready from Binarysoft
 Filing income-tax returns gets simpler for salaried persons
 Ten rules you must follow while filing income tax returns
 Reforming the income tax tribunal
 How the new system might impact consumers and businesses
 10 ways you get benefited from filing your tax return
 Returns under CGST Act,2017 with Rules

Tax bug clogs PE fund flow
March, 19th 2007

The ill effects of the budget proposal to restrict tax benefits of venture funds and private equity funds to just nine sectors are beginning to show. With the removal of pass-through status for private equity (PE) investments in most sectors, domestic PE players are now hesitant to infuse funds.

Experts say nearly $800 million of the existing funds of domestic PE players like IL&FS Investment Managers, ICICI Ventures, IDFC Private Equity and UTI Ventures are waiting to be deployed. These players together manage about $2.8 billion worth of funds.

We have deployed 26% of our second fund and with the change in the law, there is uncertainty over how the remaining funds would be deployed, said IDFC Private Equity president & CEO Louis Miranda.

In this years budget, income-tax exemptions for venture capital funds registered in India have been restricted to nine sectors including biotechnology, nanotechnology, IT hardware/software, R&D for new chemical entities, seed research, dairy, poultry biofuels and large hotel-cum-convention centres.

If domestic venture capital funds invest in any other sector and make money, they will have to pay taxes now. Till date, these funds enjoyed a pass-through status. Foreign funds, which are registered in Mauritius and only have an asset management arm in India, will remain unaffected from this curb.

While future funds can be raised as offshore entities to avoid the changed tax laws, it is the existing funds of these PE players that will be severely impacted. As these existing funds have been incorporated in India, the investments cannot be routed through tax havens like Mauritius.

Investors park money in funds, keeping in mind the existing tax rules. A change in tax law implies these players will have to take fresh approvals from their investors for deploying the existing funds.

The change in the pass-through status will slow down deployment for existing funds as we will now have to go back to our investors and take fresh approvals for making investments. The overall returns will also be skewed, said IIML MD Shahzaad Dalaal.

Some PEs like IDFC and IL&FS are considering setting up future funds in tax havens like Mauritius to circumvent the new regulation. But this requires RBI approval.

 
 
Home | About Us | Terms and Conditions | Contact Us
Copyright 2017 CAinINDIA All Right Reserved.
Designed and Developed by Binarysoft Technologies Pvt. Ltd.
Customer relationship management software CRM software Operational CRM Collaborative CRM

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