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LENS ON A|Cs WITHOUT KYC, DEPOSITS NOT COMMENSURATE WITH INCOME The income-tax department has begun raising queries with regard to what it thinks are suspicious bank deposits, including those made in cooperative banks, said tax officials and consultants with direct knowledge of the matter.The move is part of the government's crackdown on money laundering in the wake of demonetisation. “In the first round, the tax department is focusing on those bank accounts that do not have proper KYC (know your customer) credentials or cash deposits do not correspond with the individual's income,“ said one of them. ET reported on January 19 that the I-T department was looking to question cash deposits exceeding ` . 10 lakh.About 1.5 lakh accountholders have deposited more than ` . 10 lakh each and there have been suspicious cash deposits in one crore accounts belonging to 75 lakh people, ET said. The tax department is specifi cally targeting some people in the first round based on big d...

Regulator also wants ELSS investment limit increased to Rs 2 lakh The capital market regulator is said to have asked the finance ministry to ease tax rules for stock trading and investments in mutual funds, measures that should help give the equity market a boost if accepted. In its recommendations to the government ahead of the Union budget, the Securities and Exchange Board of India has suggested lowering the securities transaction tax (STT) for stock trading and reducing the holding period for debt mutual funds to 12 months from 36 months for consideration of long-term capital gains. The regulator has also sought an increase in the investment limit for tax-saving equity mutual fund schemes to Rs.2 lakh from Rs.1.5 lakh. “Sebi has written to the gov ernment that rebates under Section 88E for securities transaction tax paid should be restored,“ said a senior regulatory official. STT, introduced in 2004, was initially fully deductible against the income tax payable. In 2008, th...

Total inflows double to Rs.24,862 crore over past year; however, more changes needed, say observers PAVAN BURUGULA Mumbai, 23 January Alternative Investment Funds (AIFs) are reaping dividends from an easier regulatory framework. In the past year, investments made by these entities have increased more than two fold to Rs.24,862 crore, shows data from the Securities and Exchange Board of India (Sebi). AIFs are pooled funds, similar to mutual funds but with more liberal investment norms. The investment size is higher, given the high risk associated with these products. There are three categories. Category-I comprises infrastructure, social venture and small & medium enterprise funds. These attract special concessions, including tax breaks for investors, and were designed to fund capital-intensive sectors. Category-II consists of private and equity funds that are allowed to invest anywhere in any combination. However, these cannot invest in debt except for day-to-day operat...

Foreign portfolio investors (FPIs) are jittery as recently revised India-Singapore tax treaty has created confusion over general anti-avoidance rule (GAAR) overriding bilateral tax treaties. This is despite the fact that a high-level panel, led by tax expert Parthasarathi Shome, had recommended that GAAR should not override bilateral tax treaties. A clause in the revised double taxation avoidance agreement (DTAA) with Singapore says domestic laws such as GAAR will override the treaty, even as the pact has a limitation-ofbenefits clause. The industry is now looking for a clarification on this aspect. One of the key concerns of foreign investors is how GAAR would apply in case an investor is availing benefits under DTAA. “It should be clarified that provisions of GAAR would not be invoked if the tax treaty itself contains antiavoidance and anti-abuse provisions like limitation-of-benefits clause. Also, with so much global thrust on base erosion and profit shifting (BEPS), it sh...

CBDT or Central Board of Direct Taxes has instructed its officials not to file appeal against court and tribunal judgments mechanically. Business Standard New Delhi,24th January 2017