Latest Expert Exchange Queries

GST Demo Service software link:
Username: demouser Password: demopass
Get your inventory and invoicing software GST Ready from Binarysoft
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: VAT Audit :: TAX RATES - GOODS TAXABLE @ 4% :: due date for vat payment :: form 3cd :: ARTICLES ON INPUT TAX CREDIT IN VAT :: ACCOUNTING STANDARD :: list of goods taxed at 4% :: VAT RATES :: TDS :: cpt :: empanelment :: ICAI offer Get Windows 7,Office 2010 in Rs.799 Taxes :: Central Excise rule to resale the machines to a new company :: articles on VAT and GST in India :: ACCOUNTING STANDARDS
From the Courts »
 Commissioner Of Income Tax, Delhi Vs. M/s. Maruti Udyog Ltd
 Pr. Commissioner Of Income Tax - 6 Vs. M/s. Mohan Export India Private Limited
 Principal Commissioner Of Income Tax-7 Vs. Oriental International Co. Pvt. Ltd.
 Pr. Commissioner Of Income Tax-2 Vs. British Motor Car Co.(1934) Ltd
  Vidyadayani Shiksha Samiti vs. CIT (ITAT Delhi)
 Halcrow Consulting India Pvt. Ltd vs. DCIT (ITAT Delhi)
 ACIT vs. TRN Energy Pvt. Ltd (ITAT Delhi)
 Aditya Chemicals Ltd vs. ITO (ITAT Delhi)
 Gayatri Aggarwal Vs. Income Tax Commissioner & Ors.
 Paradigm Geophysical Pvt. Ltd. Vs. Commissioner Of Income Tax (International Taxation)-3, New Delhi
 Download Companies (Amendment) Act, 2017

Gains from MF switch under tax scanner
July, 22nd 2008

Indian tax authorities are putting to good use their information network to spot evasion and bolster collection.

Taxmen have now trained their sights on several investors who had invested a few lakhs in mutual fund schemes and then switched between schemes. The income-tax department is scrutinising the tax returns of several individuals, who have switched their investments during the course of a year.

The exercise is primarily aimed at preventing tax evasion and ensuring greater compliance. In several cases, the income-tax department has started examining tax returns to ascertain whether investors have short changed it by not paying short-term capital gains tax while exiting a scheme before the completion of one year. Switching schemes does not violate any norms, but investors have to pay a short-term capital gains tax of 15% if they sell the units of a mutual fund or stocks before one year.
Not just that. Many individuals, who had invested over Rs 2 lakh in some of the mutual funds, have been told to provide proof of their source of funds for such investments, an official said.

Among those whose returns were picked up by the tax officials include pensioners, who switched their mutual fund investments and filed their tax returns last fiscal. Their returns were picked up for scrutiny based on third party information given by the mutual funds to the tax department.

The tax department will seek an explanation on the source of funds used to finance these investments, even if it means that the investor has used the same corpus to invest in a particular mutual fund after exiting from another.

All mutual funds are mandated under the income-tax law to list transactions of clients who buy units worth Rs 2 lakh or more. They also need to quote the permanent account number (PAN) of these customers. So, an individual who buys units in a particular mutual fund, but exits the fund within six months to purchase units in another fund, will have two transactions in his ledger, called individual transaction statement.

This is because both the mutual fund houses independently file annual information returns (AIR) with the tax department. This information, in turn, is matched with the tax returns of the individual to check if he has assets disproportionate to his known sources of income and has short paid taxes.

According to tax department officials, the income tax returns of such individuals are likely to be picked up for scrutiny as there is no way now to check if the taxpayer is rolling his money over for various investments.

While PAN establishes an audit-trail of these transactions, there is no one-to-one linkage between every investment and the source of funds. Several taxpayers whose returns were picked up for scrutiny have informed the department that they merely rotated their money. This is more so for senior citizens who move their capital frequently. In most cases, the department has accepted their explanation and dropped proceedings against them, said a senior tax department official.

But the problem is likely to continue even in the current fiscal. Experts said a statement akin to a cash-flow would help resolve the problem. But that is out now. So taxpayers have to reconcile to the fact that their returns may be picked up for scrutiny this fiscal also and then hope to sort out their problems on a case-to-case basis.

Home | About Us | Terms and Conditions | Contact Us
Copyright 2018 CAinINDIA All Right Reserved.
Designed and Developed by Binarysoft Technologies Pvt. Ltd.
SEO Company Search Engine Optimization Company US SEO Local SEO Company Website SEO Company Alabama SEO Company Alaska SEO Company Arizona SEO Company Arkansas SEO Company California SEO Company Colorado SEO Company Connecticut SEO Company Delawa

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