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: cpt :: list of goods taxed at 4% :: due date for vat payment :: ICAI offer Get Windows 7,Office 2010 in Rs.799 Taxes :: TAX RATES - GOODS TAXABLE @ 4% :: empanelment :: ACCOUNTING STANDARD :: form 3cd :: articles on VAT and GST in India :: VAT Audit :: Central Excise rule to resale the machines to a new company :: TDS :: VAT RATES :: ACCOUNTING STANDARDS :: ARTICLES ON INPUT TAX CREDIT IN VAT
News Headlines »
 How to file income tax returns online without having Form 16 in 10 simple steps
 Deadline For Filing Income Tax Return (ITR) Is Just 11 Days Away: 10 Latest Details To Know
  10 incomes you need not pay any tax on
 How To File Income Tax Returns In Three Steps By March 31, 2018
 10 things about income tax every taxpayer should know
 What to do if your TDS is not deposited with the government
 What if you forget to verify your Income Tax return?
 TDS on rent and other tax tasks to complete before March 31
 5 income tax changes which will come into effect from April 1, 2018
 Why you shouldn't be a last-minute tax filer
 How to calculate income tax for this assessment year on Moneycontrol

Guarantee on capital, not returns
August, 31st 2006
It is curious that Capital Protection Oriented Schemes have been singled out for prohibition against promising a guaranteed return as well. The Securities and Exchange Board of India (SEBI) has come out with a circular dated August 14, 2006, to all registered mutual funds asking them to state clearly in their offer documents relating to Capital Protection Oriented Schemes (CPOS) as well as in the Key Information Memorandum (KIM) and advertisements relating to such schemes that what is protected is the capital and that no guaranteed return is offered. The way the exhortation is worded it would appear that the two cannot go hand-in-hand a scheme that offers capital protection cannot in addition offer guaranteed returns and vice-versa. The SEBI Regulations do not frown upon guaranteed return schemes so long as the promise is made by the sponsor or the Asset Management Company (AMC). In the event, it is curious that CPOS have been singled out for prohibition against promising a guaranteed return as well. Why should the two objectives be perceived to be mutually exclusive? The circular wants such schemes to drive home the message that capital protection is ensured not through guarantees, insurance cover, etc., but by the very nature of the structure of the investment portfolio of the scheme. That such schemes are not proscribed from investing in equity is abundantly clear from the line contained in the circular, which reads: "Further, it should also be ensured that the debt component of the portfolio structure has the highest investment grade rating." Portfolio structure How can a scheme guarantee return of capital intact when it is allowed to flirt in equity investment which by its very nature is theoretically capable of melting away completely. Even a partial meltdown can spell trouble for the scheme when the time for redemption arrives. In the event, to ensure that CPOS live up to their promise, the sponsors or the AMC should also have been mandated to stand guard instead of merely relying on the structure of the portfolio of the scheme. That CPOS can only be close-ended schemes susceptible to redemption pressures must be noted in this regard. Coming to the issue of returns, it is a trifle curious that SEBI believes that investors in mutual funds would be more worried about safety of capital rather than about returns. If safety of capital were the only counter, wise investors would rather keep their money under their mattresses! And contrariwise, if the return on investment were the only worry, they would have plumped for a pure income scheme, thus steering clear of trouble. SEBI should, therefore, revisit the entire issue of guarantees dispassionately to make the idea workable and meaningful. If the idea of CPOS is to lure investors to balanced schemes with a sizeable equity component, then the sponsor or the AMC must be allowed to give both the guarantees. S. Murlidharan (The author is a Delhi-based chartered accountant.)
Home | About Us | Terms and Conditions | Contact Us
Copyright 2018 CAinINDIA All Right Reserved.
Designed and Developed by Binarysoft Technologies Pvt. Ltd.
Binarysoft Technologies - Our Mission

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