Saturday, June 16, 2007

Capital gain or business income ?

The clichéd question is back.
Now it’s almost become a habit for India’s CBDT to confuse tax payers by issuing conflicting opinions and then consolidating all that mess into one super mess in the form of a Circular – but its title will read `clarification’.

The latest circular implies that tax officials will have to look into the holding pattern of the securities bought and sold, the sale-purchase ratio, the time involved, the funding sources and the overall transaction volume etc. If you were even remotely connected with the business of trading in the stock market, you would ask “ so what’s new ?”

Amarjeet Singh, partner, KPMG India, echoed my sentiment: “This circular does not make a huge material difference as it is just an aggregation of previous principles. In the case of litigation, this clarification gives them (FIIs) an upper hand. Now, I have principles on the basis of which I can ask for the courts to give me a benefit (in litigation on tax reatment).”

Oh, yeah…everything is clear now. CBDT has done its job. May you all rest in peace. Time to get back into the woodwork.

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