Latest Expert Exchange Queries

GST Demo Service software link: https://ims.go2customer.com
Username: demouser Password: demopass
Get your inventory and invoicing software GST Ready from Binarysoft info@binarysoft.com
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
 
 
 
 
Popular Search: form 3cd :: TAX RATES - GOODS TAXABLE @ 4% :: list of goods taxed at 4% :: ACCOUNTING STANDARD :: VAT RATES :: TDS :: ARTICLES ON INPUT TAX CREDIT IN VAT :: VAT Audit :: articles on VAT and GST in India :: ICAI offer Get Windows 7,Office 2010 in Rs.799 Taxes :: ACCOUNTING STANDARDS :: cpt :: empanelment :: due date for vat payment :: Central Excise rule to resale the machines to a new company
 
 
« News Headlines »
 All you should know while filing Form GST TRAN-1
 What is Goods and Service Tax?
  Income Tax department open to reducing withholding tax for companies
 How to respond to a tax notice under section 143
 Income-tax (22nd Amendment) Rules, 2017
 All about Exports under GST
 Have you missed the due date of filing your Tax Returns?
 What you should know about income tax refunds
 Income tax scrutiny to remain limited despite surge in returns filed
 Regarding Filing of online return for first quarter of 2017-18 extension upto 01-09-2017
 Deadline to file returns extended to 28 August for biz with transitional

Taxman targets PN profits - I-T Dept Says Underlying Assets, In This Case Stocks, Are In India
May, 02nd 2008

Tax authorities have indicated that income from trading in participatory notes, better known as PNs, should be taxed in India. Though issue and trade of PNs take place on foreign shores by entities not based in India, the income-tax department has raised a query on its taxability.

PNs are offshore derivative instruments issued by FIIs registered in India to overseas investors with no direct access to the domestic stock market.

Tax experts say this is similar to the departments stance in the Vodafone case. It had issued a show-cause notice to Vodafone, Netherlands, which acquired Hutch-Essar from Hong Kongs Hutchison.

Though the deal was sealed abroad by two overseas parties, the I-T departments rationale is that tax is payable in India as the underlying asset is in the country. It has applied the same thinking to PNs toothough they are offshore derivatives sold outside the country, the underlying assets are stocks of companies in India, traded on Indian stock exchanges.

At one stage, PNs contributed about one-third of the FII trading volumes. But volumes have dramatically dropped since November when Sebi banned issuing PNs to unregulated foreign entities and checked proprietary accounts of FIIs. It also put an immediate stop on PNs where the underlying was local stock derivatives. FIIs get I-T notices

However, if the tax department does indeed make a claim on the profits earned in earlier years, the amount could be significant. A few weeks ago, the department had sent notices to select FIIs, seeking details of their PN profits. Most FIIs operate out of Mauritius and pay no capital gains tax in India, thanks to the India-Mauritius tax treaty. The question that has cropped up is whether the treatys benefits should be extended to PN trades. The IT department recently collected the PN deal details from Sebi and custodians, and chances are that the non-Mauritius entities will come under greater scrutiny. Before the recent Sebi clampdown on PNs, FIIs issued these derivatives to hedge funds, and as per the agreement, the income earned by FIIs from transaction in Indian shares was passed on to the hedge funds after retaining commission by FIIs. The tax authorities possibly view that FIIs should withhold the tax amount while passing on the gains to PN holders. Some sections are of the view that the tax department can move on the proposal only after the court gives its ruling on the Vodafone case.

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

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