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New Delhi, Aug. 12 The Confederation of Indian Industries has called for a clear methodology to distinguish between shares held as investment and shares held as stock-in-trade.

In a statement, the chamber said that share or security bought for delivery needs to be treated as a capital asset, and any gains from sale of such shares be treated as capital gains.

On derivative transactions, the CII pointed out that current regulation in Indian markets do not allow delivery in the Futures and Options segment but these contracts have to be settled in cash on the expiry date.

“If one follows the test of delivery to qualify a transaction for capital gains, so long as regulations do not change to result into delivery for F&O, CII feels that all such transactions should not qualify for capital gains,” the statement added.

The CII said it appreciated Central Board of Direct Taxes’ emphasis on possibility of taxpayer having two portfolios, namely investment portfolio and trading portfolio, and earn an income under the head capital gains as well as business income.

It was the single-largest progressive step as it is extremely common for any taxpayer to simultaneously engage in ‘investment’ and ‘trading’, it said. It, however, suggested that the Government follow the methodology suggested by the apex association to remove most of the disputable issues in the hands of the taxpayer and arbitrary discretion in the hands of the assessing officers.

More Stories on : Taxation | Investments | Industry Associations

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