Comments
India Inc will closely follow Finance Minister Arun Jaitley’s reply on various taxation provisions in the Finance Bill this week.
The treatment of capital gain tax on debt mutual fund, the General Anti Avoidance Rules (GAAR), and retrospective tax are some of the issues the industry is worried about.
In an interview with Business Line, Rajesh Laddha, Chief Financial Officer, Piramal Group, talked about the concerns of the industry and the remedial measures needed. Edited Excerpts:
The corporate world is unhappy over changes in the short-term capital gains tax on debt mutual fund. What’s your take?
The proposed retrospective amendment in the definition of short-term capital gains is contrary to what the Finance Minister said in his Budget speech, where he categorically stated that the Government does not intend to create new liability for past years by means of retrospective tax amendments unless they are rarest of rare cases.
Further, the Minister spoke of reviving the economy and promoting investments.
The Finance Bill now proposes to amend the definition of short-term capital gains to restrict the beneficial holding period of 12 months only to listed securities, thereby, excluding unlisted securities or a unit of mutual fund (other than equity-oriented mutual funds) from the benefit.
Is it true that that corporations use debt mutual fund schemes mainly for the tax arbitrage and cheaper funds?
To some extent corporates do use, but largely it’s by retail and high net worth individual investors.
Most direct tax provisions came into effect from April 1. So why do you call this retrospective amendment?
The amendments are also applicable to the purchase transactions made prior to March 31, 2014 and to the transactions done between April 1, 2014 and July 10 (the Union Budget date).
When these transactions were initiated (after evaluating the post-tax returns), the classification between short-term and long-term capital assets was made based on the income-tax laws, which were applicable before March 31.
India Inc is also worried about lack of clarity on GAAR…
The Government should be transparent about the date of GAAR implementation.
What are the issues you would like the Finance Minister to clarify?
First, as a matter of principle, the Government should try and avoid anything that comes as a surprise to the taxpayer.
Second, retrospective application of income-tax laws should be confined to all the matters that basically are clarifications. Third, retrospective application of the income-tax law should occur only after consultation with stakeholders. Finally, the amendments should take effect from April 1, 2016.
Comments
COMMENT NOW
Comments
Comments have to be in English, and in full sentences. They cannot be abusive or personal. Please abide by our community guidelines for posting your comments.
We have migrated to a new commenting platform. If you are already a registered user of TheHindu Businessline and logged in, you may continue to engage with our articles. If you do not have an account please register and login to post comments. Users can access their older comments by logging into their accounts on Vuukle.