16406570 shares securities ppt rajesh yadav

8/14/2019 16406570 Shares Securities Ppt Rajesh Yadav

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TAXATION

OFSHARES & SECURITIES

BYRajesh B. Yadav


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Rajesh

SHARES & SECURITIES

A. Shares

S. 2(46) of Companies Act

Equity & preference Pvt.

or public-listed or not. Bonus, Rights, Split, Stock

B. Securities

SecuritiesS. 2(h) of SCRA includes shares, scrips, debenture,includes shares, scrips, debenture,

stock, bondsstock, bonds

DerivativeDerivative

Government securitiesGovernment securities

Instruments declared by Cen. Govt.Instruments declared by Cen. Govt.

Rights or interest in securitiesRights or interest in securities

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PERIOD OF HOLDING

Relevance for shares, etc.-concessional period

Date of acquisition-Allotment unless provided

12 months completed on-preceding date

12 months according to British calendar

January 26, 2010


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DATE OF ACQUISITION

Purchase/sale from market Sale not defined-Date of Contract-Cir. No. 704

Nature of property

S. 82 of Companies Act-Sale of Goods Act Delivery with duly executed transfer form

Payout dateAlternative pay in

Applies to shares in E-Form, demat account VandhaBad delivery

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COST OF ACQUISITION

Not defined Commercial man

Acc. Principles

BrokerageStamp dutyStamp duty

Legal chargesLegal charges

Service taxService tax

InsuranceInsurance

Private placement funding

January 26, 2010


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INTEREST AS A PART OF COA

Difficulty due toexemption u/s 10(34),10(35)

S. 48 COA

One viewCom & Acc. principleCom & Acc. principle

not definednot defined

exp. for acquisitionexp. for acquisition

Other viewRevenue natureRevenue nature

Subsequent payment &Subsequent payment &

costcost

January 26, 2010


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DEMATERIALISATION

ConceptDepositoryDepository

DPDP

DRFDRF

S. 45(2A)Beneficial Owner only-FIFO MethodBeneficial Owner only-FIFO Method

Applicability to a dealerApplicability to a dealer

Circular No. 768

Overrides S. 45(2A) as also Cir. No. 704Overrides S. 45(2A) as also Cir. No. 704

January 26, 2010


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INDEXATION

Bonds and Debentures

Amalgamation and Demerger

Annual Interest Capitalisation Difficulty

January 26, 2010


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LTCG EXEMPTION S. 10(38)

New regime of STT

Condition for compliance

Capital assetCapital asset

Equity SharesEquity Shares

EOMF unitsEOMF units

Held as investmentHeld as investment

Transfer on or after 01.10.2004Transfer on or after 01.10.2004

Transaction of transfer liable to STTTransaction of transfer liable to STT

LTCALTCA

Sale essentialSale essential

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IMPLICATIONS- S. 10(38)

Buyback, Amalgamations, Open offer exchange,Reduction, Redemption, Rights, de listed shares

Benefit for ESOP

Loss on transfer whether adjustable Unabsorbed loss whether set-off possible

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IMPLICATIONS- S. 10(38)

EOF

Investment in equity sharesInvestment in equity shares

50% of total proceeds Proceeds ?50% of total proceeds Proceeds ?

Shares of domestic companyShares of domestic company

Specified u/s 10(23D)Specified u/s 10(23D)

Annual average of monthly averageAnnual average of monthly average

Date of determination not clearDate of determination not clear

Payment of STTPayment of STT

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CONCESSION - STCG S. 111A

Capital assetEquity SharesEquity Shares

Units of EOMFUnits of EOMF

STCA

10% of gains + SC + EC

STT not deductible

Other deductions possible

January 26, 2010


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STCG- s. 111A

Other conditions to apply Chapter VI-A deductions after exclusion

Rebate under s. 88 on balance

Rebates possible u/s 88 B,C& D

Additional relief for Individual and HUF

Non residentNon resident

All Assessees

January 26, 2010


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STCG s. 111A

Rebate

Exclusion from Rs. 5,00,000/- GTIExclusion from Rs. 5,00,000/- GTI

Losses

Option not to set-offOption not to set-off

Whether set-off of other losses possibleWhether set-off of other losses possible

Cir. No. 721 dated 31.09.1995Cir. No. 721 dated 31.09.1995

Script wise calculationScript wise calculation

Whether STCL can be set-offWhether STCL can be set-off

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SECURITIES TRANSACTION TAX (STT)

Nature of Tax Effective date

Applicability

Shares of & EOMFShares of & EOMF

Shares & Securities excludedShares & Securities excluded

Transaction on a recognized stock exchangeTransaction on a recognized stock exchange

Transactions excludedTransactions excluded

Delivery and Non DeliveryDelivery and Non Delivery

Purchase and/or salesPurchase and/or sales

Persons coveredPersons covered

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CREDIT / REBATE FOR STT

88E w.e.f. A.Y. 2005-06

Possible for Business Income

Equivalent to STT paid

Credit not exceeding I.Tax on STT income

Average rate of tax & s.2 (10)

Evidence with Return of Income

No refund and c/f possible

Set-off against tax on other income

STT on purchase eligible

Difficulties in case of common business

January 26, 2010


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RIGHT ENTITLEMENTS

DOA-Date of offer

Dhun Kapadias case

COA-Nil-Unless acquired from market

Merges into right shares

RIGHT SHARES

DOA-Allotment-Indexation also

COA -Amount actually paidCOA of entitlement if anyCOA of entitlement if any

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BONUS

Position before amendment DOA-Allotment

COA-Nil

Genuine difficulty in some cases Applies to units also

Bonus in the hands of a dealer

Bonus stripping

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AMALGAMATION

Whether transfer

Exemption vide S. 47(vii) on compliance

POH-Old period to be included

COA-Old COA Substitution of FMV possible

Indexation

Does not apply to dealer

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DISCOUNT BONDS

Concept

Instruction No. 225 dated 12.08.1996-Interest

Position of buyer from market

Position of seller following accrual method

Appropriate course of action

Cir. No. 2/2002 dt. 15.2.2002 Press Release dt. 20.3.2002-Prospective

January 26, 2010


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NRI- CHAPTER XII A-I

Special treatment for investment income and LTCG Inv. Income at 20% & LTCG on F/E Asset at 10%

STCG - Specified asset -Non F/E Asset- Bonus share

Re-investment of LTCG on F/E Asset

No deduction for expenditure No allowance or Chapter VI-A benefit

January 26, 2010


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NRI CHAPTER XII A-II

No benefit of indexation Illusionary benefit and s. 112

Continuation of benefit on becoming a resident

Exemption for filing Return of Income

Option to opt out

Possible to apply for combination

LTCG on non-specified asset

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FOREIGN SECURITIES

No specific provisions regular provisions Holding period Shares, units, securities

Special u/s 10(36) and not available

Benefit of exemption 10(34) and 10(35) not available

Computation of Capital Gains Benefit of indexation possible proviso to s. 112

benefit not available

Treatment of losses

Tax Audit and DTC and s. 91

January 26, 2010

DIVIDEND AND INCOME FROM UNITS


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DIVIDEND AND INCOME FROM UNITS

10(34) AND 10(35)

Exemption from tax

Tax in the hands of payer u/s 115 O/R at 12.5%

Deduction of expenses and s. 14A

Possibility of capitalization Provision of s. 94(7)

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CONCESSIONAL RATE S. 112

LTCG at 20% Threshold exemption for individual and HUF

Set-off of losses mandatory

Special concession under proviso

10% tax on LTCG listed securities or units Computation without indexation

Whether optional simultaneous calculation

Right to set-off losses on securities and units

M. Ramanlal. 3 ITD 122 (Ahd)

Nimesh S. Shah, 36 BCAJ 645 (Mum)

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DERIVATIVES-II

Whether Speculation Business

Applicability of Explanation to S. 73

Treatment of provision for losses

Book Profit

Effect of daily settlement Method of Accounting

Transaction Cost

Valuation at the year end Time of accrual of premium for writer

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DERIVATIVES-III-CAPITAL GAINS

Underlying Assumptions

Right an assetRight an asset

Fictional purchase & saleFictional purchase & sale

Merges with a larger assetMerges with a larger asset

Situations

Cash settledCash settled HedgingHedging

Delivery settledDelivery settled

Short-Term Capital Asset

Lapse of contract

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INVESTMENT V. STOCK

Which is beneficial

Allowance of expenses . ConcessionsAllowance of expenses . Concessions

Application of s. 14AApplication of s. 14A

Set-off of lossesSet-off of losses

Credit for STTCredit for STT

C/f of lossesC/f of losses

Trade-off

Ramnarain & Sons, 41 ITR 534(SC)Ramnarain & Sons, 41 ITR 534(SC)

N.S.S. Investments, 277 ITR 149(Mad)N.S.S. Investments, 277 ITR 149(Mad)

Mysore Rolling Mills, 195 ITR 404(Karn)Mysore Rolling Mills, 195 ITR 404(Karn)

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ARBITRAGE

Nature of activity

Objectives

Income

Business -Capital Gains Other sourcesBusiness -Capital Gains Other sources

Speculative transactions

Delivery - HedgingDelivery - Hedging

Losses

S. 43(5) - Explanation to s. 73S. 43(5) - Explanation to s. 73

Expenses Credit for STT

Tax Audit

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PORTFOLIO MANAGEMENT

Types of arrangements

ParticipatingParticipating

Non participatingNon participating

Nature of fees

Advisory & ManagementAdvisory & Management

BrokerageBrokerage

Relationship & Treatment

Proposal under considerationProposal under consideration

Deductibility of expensesDeductibility of expenses

BusinessBusiness

Capital gainsCapital gains

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SPECULATION BUSINESS-I

S. 43(5) Delivery essential Intention not relevant Expl. 2 to S. 28

Separate treatment S. 73 loss

Company - Deemed speculation under Expl.

Stray transactions of non delivery

Investments of company

Exception to Explanation

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Explanation applies to losses as also profits Units and other securities

Shares of one company

Delivery-only business No business-only diminution in value

IPO acquisitions

Tax Audit

SPECULATION BUSINESS-II

January 26, 2010


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16406570 shares securities ppt rajesh yadav

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