Skip to main content


Income from Alternate Investment Fund to be taxed at 30%

Trustees of the fund will be taxed if investors are not named


The Finance Ministry has said that income of Alternative Investment Funds (AIF) will be taxed at the rate of 30 per cent. Such funds basically pool in money from domestic and overseas investors and invest on the basis of a pre-determined policy.

The Central Board of Direct taxes was requested to clarify whether the income of such funds would be taxable in the hands of investors (contributors to the fund) or the trustees of the fund (who will be representing investors and know as Representative Assessee).

The board said that, "In a situation where the trust deed either does not name the investors, or does not specify the beneficial interest, the entire income of the fund shall be liable to be taxed at the Maximum Marginal Rate of income tax in the hands of the trustees of such AIFs in their capacity as representative assessee."

It has also been clarified that once tax paid by the trustee, investors will not be required to pay a tax. At present, the maximum rate of income tax is 30 per cent (plus education cess at the rate of 3 per cent of tax). Experts feel that this circular gives a much needed clarity, however, there are still some areas of concern.

Ammet Patel, Tax Partner at Sudit K Parekh & Co (a leading Chartered Accountant Firm), said, "Investors will know at the time of putting the money what will be the rate of tax incidence and hence will make decision accordingly."

He said that circulars are binding on the Income Tax Department and not on the tax payers. It would have been better had the Finance Ministry clarified through amendment in Income Tax Act.

Jyoti Rai, India Head of Mauritius-based Abax Corporate Services, said that the CBDT clarification needs to be revisited, since it otherwise may have negative implication for funds industry in India.

"The industry, for long, has been relying upon the Alternative Investment Fund Ruling for determinate tax pass through status," she said.

The circular also mentioned that in cases where the beneficiaries of the fund are determined or mentioned in the trust deeds, "the tax on the whole of the income of the fund, consisting of or including profits and gains of business, would be levied on the trustees of such AIFs being representative assessee at the Maximum Marginal Rate."

The circular clarified, however, that the new norms will not operate in area falling in the jurisdiction of High Court, which has taken or takes contrary decision on the issue.

Taxing issues

·  CBDT was asked to clarify on the issue

·  Once trustees are taxed, investors will not be taxed

·  Tax experts welcome clarification, but some concerns remain


Popular posts from this blog


CONTENTS SR. NO. CHAPTER PAGE NO. INTRODUCTION STOCK & RECEIVABLES AUDIT VERIFICATION OF STOCK & DEBTORS PROCEDURE OF STOCK AUDIT VERIFICATION OF SECURITIES ANALYTICAL REVIEW INTERNAL CONTROL QUESTIONNAIRE STOCK b) BOOK DEBTS LIST OF DOCUMENTS TAKEN AS WORKING PAPERS SPECIMEN INSPECTION REPORT SPECIMEN MANAGEMENT REPRESENTATION LETTER CHAPTER 1 INTRODUCTION: Banking is an important sector of the economy of any country and for the development of the economy a healthy banking system is a must. After the liberalization of the economy, the banking system has undergone a total change in India. There is hard competition in the banking industry to survive in the current circumstances. With the purpose to have better financial discipline & to ensure uniformity in accounting norms RBI introduced the concept of assetclassification & income recognition as per the recommendations of Narasimhan Committee. It was also suggested to classify the advances given by banks into Performing & Non Perfor…

Excel Add-in to convert amount in figures to words by Premal

AmtInWords.xla is attached to this mail. It is an MS Excel Add-in written by me to convert amount available in figures to words.
Copy the attached file to the folder where excel stores the add-ins. (To know where excel stores the add-ins, open any workbook, click on Tools - Add-ins - Browse)
Then open an excel workbook. Click on Tools - Add-ins - Browse - Give the path to this Addin - Ok
You can use the functions AmtInWords and AmtInWordsUS in any worksheet. The syntax is:
=AmtInWords(decimal number/cell reference, [currency code])
=AmtInWordsUS(decimal number/cell reference, [currency code])
Examples follow:
=AmtInWordsUS(B3) ' Shall give the amount in millions (US format)
=AmtInWordsUS(B3,"USD") ' Shall give the amount in millions (US format) and in US currency (Dollars)
=AmtInWords(C4,"GBP") ' Shall give the amount in lakhs and in UK currency (Pounds)
The system shall N…

Pradhan Mantri Garib Kalyan Deposit Scheme (PMGKDS), 2016?

*1. What is Pradhan Mantri Garib Kalyan Deposit Scheme (PMGKDS), 2016?*Pradhan Mantri Garib Kalyan Deposit Scheme (PMGKDS), 2016 is a scheme notified by the Government of India on December 16, 2016 which is applicable to every declarant under the Taxation and Investment Regime for Pradhan Mantri Garib Kalyan Yojana, 2016.*2. Who is eligible to deposit in PMGKS?*The deposit under this Scheme shall be made by any person who declared undisclosed income under sub-section (1) of section 199C of the Taxation and Investment Regime for Pradhan Mantri Garib Kalyan Yojana, 2016.*3. In what form will the deposits under this scheme be held?*The Deposits shall be held at the credit of the declarant in Bond Ledger Accounts (BLA) maintained with Reserve Bank of India.*4. Who are the authorized agencies where the application and amount of deposit will be accepted?*Application and amount for the deposit (in the form of Bond Ledger Account) shall be received by any banking company to which the Banking …