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 VAT and GST in India :: Central Excise rule to resale the machines to a new company :: VAT RATES :: ACCOUNTING STANDARDS :: TDS :: VAT Audit :: ACCOUNTING STANDARD :: ARTICLES ON INPUT TAX CREDIT IN VAT :: due date for vat payment :: TAX RATES - GOODS TAXABLE @ 4% :: form 3cd :: cpt :: ICAI offer Get Windows 7,Office 2010 in Rs.799 Taxes :: list of goods taxed at 4% :: empanelment
 
 
News Headlines »
 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
 New disclosure scheme could see 50% tax and 4-year limit on cash use for unaccounted deposits
 Pay 50% tax on unaccounted deposits, or 85% if caught, says Modi government

Refund claims may rise on derivatives losses
April, 03rd 2008

Unexpected losses suffered by corporates, which were exposed to forex derivatives and lower profits for banks, could result in a rise in refund claims with the Income Tax Department.

Much after corporates paid out advance taxes for the year 2007-08, the Institute of Chartered Accountants of India (ICAI) revised accounting norms, forcing companies to make provisions for losses on derivative contracts. Also, banks and bond houses saw a major portion of their treasury profits vanish in the past two trading days of 2007-08. Government bond prices fell by over 50 paise in the past two days, after the government announced higher-than-expected inflation numbers.

According to reports, corporate losses on account of exposure to foreign exchange derivatives are expected to be over Rs 15,000 crore. Most of these losses have surfaced in the past two quarters. Also, most corporates had not factored in these losses while estimating their tax liabilities.

Sanjeev Shah, a Vadodara-based chartered accountant, said that since the ICAI guidelines came much later. Many companies, with derivatives exposures, have not factored in derivatives losses while calculating advance tax. He added that several small and medium enterprises have been sold these contracts. In some cases, the contracts are claimed to have been concluded over the phone. These businesses are now denying any liability.

According to Sudhir Kapadia, a Mumbai-based chartered accountant, there is nothing to support the view that there will be a general rise in advance tax claims. But he added that in specific cases where a company has suffered a derivatives loss, it can be assumed that one-thirds of the losses would be claimed as a refund.

Also, banks, which have sold derivatives contracts to corporates, stand to lose on many of these contracts since corporates are refusing to fulfil their contractual obligations. Banks are declaring these corporates as defaulters in order to drag them to the debt recovery tribunal for a speedy recovery. But the flip side of such a classification is that banks have to make provisions for non-performing loans. And it is not just the disputed derivatives contract that has to be classified as non-performing, the entire loan advanced to the corporate has to be treated as a bad loan and provided accordingly.

The extent of NPA provisioning will be known only after sometime since banking regulations require only those loans, which are overdue for three months, to be classified as NPAs.

 
 
Home | About Us | Terms and Conditions | Contact Us
Copyright 2016 CAinINDIA All Right Reserved.
Designed and Developed by Binarysoft Technologies Pvt. Ltd.
Binarysoft Technologies - Achievements

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