Tag: Sudhir Kapadia

Move to tax capital gains counter-productive, says Nandita Parker of Karma Capital

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Bears refuse to loosen their grip on the equity market as foreign portfolio investors (FPIs) sell down Indian equities relentlessly ever since the budget blow of higher surcharge and taxation. In fact the total foreign institutional investor (FII) selling in July has almost gone up to Rs 14,400 crore.

Contrast this with the massive inflows the market was getting in March and April before the budget and elections. While Finance Minister Nirmala Sitharaman has made some comments about facilitating the transition from trust to company, the government has shown no intention of going back on its move of higher tax on FPIs and Category 3 funds.

CNBC-TV18 spoke with Co-CEO at Avendus Capital Alt Strategies Vaibhav Sanghavi, National Tax Leader at EY Sudhir Kapadia, Managing Partner at Karma Capital Management Nandita Parker and CEO of Dhruva Advisors Dinesh Kanabar to understand what is the way forward and whether the FPI selling will stop anytime soon.

Sanghavi said, “If it is possible to switch from a trust to a corporate structure, we would definitely look at it. In India if we talk about Category 3 AIFs, which have got affected because of the surcharge, Indian Company Law does not provide specific fund carve-outs for an open-ended scheme to be managed. There are lot of regulatory or operational difficulties in operating like a company. So, virtually it is impossible to manage a fund under the company structure in India.”

Parker remains upbeat about the statement of the finance minister. “After the bill was passed 10 days ago, we were very disappointed. We continue to make overtures to the government and all our conversations at the Finance Ministry level seem to have indicated that this surcharge was unintended on FPIs at least and that something would happen. So, now that the finance minister has come out and made this statement, I am a little more hopeful. The point that everyone has made is that this surcharge does impact at least 40 percent of the FPIs that are registered in India,” she observed.

“FPIs are registered in such a way to meet global statutory norms and requirements and not just for India. Therefore it would be very difficult for them to change their structures just for India and by imposing these surcharges we are hurting an enormous amount of capital that might come in going forward. This whole question of taxing capital gains is making India stand out in the world as a difficult tax regime,” Parker noted.

According to Kapadia, an institution earning more than Rs 5 crore cannot be superrich. “I think it would be a wrong direction to expect a conversion to company to escape the surcharge because you have a sword of Damocles like GAAR hanging which is bound to be subjective by its very nature,” Kapadia added.

“First thing is whether the regime under which people operate will permit them to be structured as a company instead of a trust? Then let us assume you are in a position to migrate from a trust structure to a company structure, what about the inbuilt appreciation on which you will end up paying gains today? So, it is like saying that going forward if you want to make investments in India, set up a new corporate structure and make investment. There is no such structure in Income Tax Act which provides that regime to be tax free. So, if you are going to end up paying capital gains tax on your gains which have not been realised then is it a facilitation at all?” Kanabar asks.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Historically, govt has very rarely made any tax changes ahead of elections: Dhruva Advisors

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Dinesh Kanabar, CEO of Dhruva Advisors and Sudhir Kapadia, National Tax Leader at EY, shared their expectations from the Budget 2019 with regards to taxes.

“If one were to go back in history, whenever there has been a vote on account with elections just round the corner, the government has very rarely made any changes to tax laws. So, finance bill which is part of the Finance Minister’s speech becomes very insignificant in a situation like that,” said Kanabar.

However, the government could still tinker the rate of taxes or increase the threshold limit etc.

“What the FM could well do and which is important in engaging the market is Angel Taxation. There is nothing in law which really stops the FM from making a number of changes to the Income Tax Act. It has rarely happened in the past,” said Kanabar.

Agreeing with Kanabar, Kapadia said, “There is nothing that prevents the FM and is in fact a good opportunity for him to say that we have introduced the GST reforms and that direct tax reforms are on the way.”

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Budget 2019: Tax experts do not expect bold measures in the pre-election budget

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

Listen to the Article (6 Minutes)

Budget 2019 is widely expected to be in sync with the government’s election agenda, with some rejig expected in personal income tax slabs and rates. Ketan Dalal, managing partner of Katalyst Advisors LLP and Sudhir Kapadia, National Tax Leader, EY shared their expectations from the Budget.

“One hasn’t seen any major announcements in the pre-election budget in the last 25 years. So, generally there are very limited announcements. Moreover, the new direct tax code (DTC) is also in the marking but the faith on that depends on which government comes to power and what transpires on variety of things,” Dalal told CNBC-TV18 on Tuesday.

With regards to the expectations of an increase in the income tax exemption limit, Kapadia said, “The government would not do anything that could erode the tax base. Moreover, it would be a U-turn of the policy objective. So, it is unlikely that this will happen but there could be some tweaks, some deductions like deduction on housing interest could be raised at least for the self-occupied properties.”

On the corporate tax front, Dalal said, “The corporate tax rate should be reduced for large corporates as well because currently the benefit is only for companies with topline upto Rs 250 crore.”

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow