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
Latest Expert Exchange
« News Headlines »
 Want to file your income tax return online? Here’s the first step
 Good news for income tax payers! Taxmen can’t deny assessee’s legitimate claim in revised return, rules ITAT
 Can file revised return after notice issued by I-T ITAT
 How to file income tax returns online if you don't have Form 16 ITR 2018-19
 These 5 websites can help you file your ITR Income tax e-filing
 Here's why some retirees no longer have to file a tax return
 How to file different categories of ITR forms online Income tax e-filing
 Here are other documents you need to file online ITR Got your Form-16 for FY18?
 10 must have documents to file your tax return
 Know all about how to file ITR FY 2017-18
 Government extends sale of pre-GST goods with stickers of revised price till July 31

Select VCFs may get tax exemptions
May, 07th 2007

Domestic venture capital funds (VCF) set up as determinate trusts and investing in unlisted firms overseas will enjoy a tax exemption on their income. A determinate trust is one where the beneiciaries are known and their shares are clearly spelt out.

In such a structure the tax benefit will be in the form of a pass-through status under the income tax law; in other words, the trust will be exempt from paying tax. The tax will have to be paid by the beneficiary when the income is distributed by the trust.

The tax exemption will be available to these funds if they comply with the norms laid out for trusts under the income tax law, said a senior government official. A clarity on the tax-treatment is vital as RBI has recently allowed domestic venture funds to invest upto $ 500 million in equity and equity linked instruments in unlisted firms overseas.

This means a domestic fund set up in the form of a trust will not have to pay tax on any income capital gains, interest, dividend earned from investments made in unlisted off-shore firms. The exemption will be available on investments made in any sector. For instance, the tax benefit will be given even if the fund invests say, in an unlisted realty firm abroad.

A pass-through status will be available to the trust on any income it earns from investments made in unlisted firms in India and abroad. The trusts will, however, have to ensure that they do not violate the conditions under Section 164 of the Income-Tax Act, said the official.

Under this section, a trust gets a pass-through status only if the share of each beneficiary is determinate. So, if there are 10 contributors to the trust, the share of each contributor should be specific, when the trust is set up. A pass through status will be denied to the trust, if this condition is not met.

However, if the domestic venture fund is not set up in the form of a trust, it will have to pay tax on any income earned from investments in unlisted firms overseas. A tax pass through will not be available to such VCFs or venture capital companies.

Home | About Us | Terms and Conditions | Contact Us
Copyright 2018 CAinINDIA All Right Reserved.
Designed and Developed by Binarysoft Technologies Pvt. Ltd.
Binarysoft Technologies - Contact Us

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