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 :: VAT RATES :: form 3cd :: cpt :: ICAI offer Get Windows 7,Office 2010 in Rs.799 Taxes :: ACCOUNTING STANDARDS :: TDS :: due date for vat payment :: VAT Audit :: empanelment :: articles on VAT and GST in India :: TAX RATES - GOODS TAXABLE @ 4% :: ACCOUNTING STANDARD :: Central Excise rule to resale the machines to a new company :: list of goods taxed at 4%
 
 
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

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 2016 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