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: ACCOUNTING STANDARDS :: ARTICLES ON INPUT TAX CREDIT IN VAT :: form 3cd :: VAT Audit :: ICAI offer Get Windows 7,Office 2010 in Rs.799 Taxes :: TDS :: due date for vat payment :: ACCOUNTING STANDARD :: list of goods taxed at 4% :: Central Excise rule to resale the machines to a new company :: VAT RATES :: empanelment :: TAX RATES - GOODS TAXABLE @ 4% :: cpt :: articles on VAT and GST in India
 
 
News Headlines »
 Delhi: 54 CAs, company secretaries on radar in I-T crackdown against black money
 10 most important income-tax changes which will apply from April 1
 10 Income Tax Rules That Will Change From April. See Details Herea
 Looking for last-minute tax planning with Section 80C investments? Here's help
 Aadhaar mandatory for filing income tax return
 Will Aadhaar linkage solve India's income tax woes?
 GST roll out from July 1 will make goods cheaper: Jaitley
 Aadhaar To Be Mandatory For Filing Income Tax Return, PAN Application
 7 best tax-saving solutions which can help you save money
  No proposal to replace Income Tax with Banking Cash Transaction Tax
 How to Make Tax Saving Investments Less Taxing with an SIP in ELSS

Fidelity Group eyes tax gains for 40 more schemes
August, 29th 2006
US-based Fidelity Group, one of the largest foreign investors in Indian stocks, has put to test the tax treatment of income from trading in shares of portfolio investors. Close to 40 offshore schemes managed by the group have sought advance rulings on the tax liability on profits from sale of shares. The rulings have been sought in the hope of getting a short-term capital gains tax waiver. An exemption is possible if the income is categorised as business income and not as capital gains. The Authority for Advance Ruling (AAR), a quasi-judicial body, has bunched together all the applications of the Fidelity Groups offshore schemes, said a senior revenue department official. Cases are normally bunched when the issues are similar. The hearing is scheduled for next month. The trigger for seeking advance rulings on tax liability on income from sale of Indian equities by different off-shore funds managed by the Fidelity Group has been an earlier ruling given by AAR in the case of Fidelity Advisor Series VIII. This sub-account of the FII registered with Sebi has been exempted paying capital gains tax in India. AAR took the view that Fidelity Series VIII does not have a fixed place of business in India. It looked at the frequency of purchase and sale of shares and ruled that the gains from trading in shares are in the nature of business income and taxable only in the US. The AARs ruling is binding on the tax-payer and the revenue department. It also has a persuasive value. The timing (of seeking rulings on a similar issue) is significant, considering that the Central Board of Direct Taxes (CBDT) is set to finalise a fresh set of norms to determine whether a tax-payer is an investor or a trader in shares. A domestic tax-payer will have to pay a higher tax if he is a share-trader. Portfolio investors coming from destinations other than Mauritius and Singapore have to pay a 10% short term capital gains tax if they hold shares for less than a year and their income from sale of shares is treated as capital gains. Simply put, they have to pay tax on short term capital gains from sale of shares, if categorised as investors. They are, however, exempted long term capital gains tax because they pay the Securities Transaction Tax (STT). Mauritius based FIIs, on the other hand, are exempted both short term and long term capital gains tax because Mauritius does not tax capital gains. FIIs routing their investments from Mauritius stand to gain if they are categorised as investors. Nearly 99% of the FIIs come from countries that have a tax-treaty with India and most of them do not have a permanent establishment (PE) or a fixed place of business in India. In such cases, if their income from sale of shares is categorised as business income, they will not have to pay any tax in India. In short, FIIs do not have to pay tax on their business income in India if they are categorised as traders in shares provided they do not have a PE and are covered by a double taxation avoidance treaty. The issue at stake, therefore revolves around the question, whether an FII is an investor or a trader in shares. The offshore schemes managed by the Fidelity Group have sought advance rulings on the characterisation of income from sale of securities whether the gains from trading in equities will be treated as business income or capital gains. The other crucial issue is the existence (or not) of a PE in India, said an official. CBDTs draft instructions to assessing officers listed out 15 parameters to check if an assessee is a trader or an investor. The criteria included the scale of activity, ratio of sales to purchases and holding, frequency of transactions, stated objects in the memorandum and articles of association in the case of a corporate assessee etc. The instructions to assessing officers applied to all market participants including domestic and foreign players.
 
 
Home | About Us | Terms and Conditions | Contact Us
Copyright 2017 CAinINDIA All Right Reserved.
Designed and Developed by Binarysoft Technologies Pvt. Ltd.
Quality Assurance Services Testing and Re-testing

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