MAT, MARKET and MANIPULATIONS
27
April 2015
MAT, MARKET and MANIPULATIONS
Greetings from Hitesh! Market is back to square one. Nifty moved from 8300 to 8900 and back to 8300. Investors are asking what next? Nifty 7700 or 8700 first? Let us look at the root cause of the market fall at this juncture.
Minimum Alternative Tax (MAT):-
What is it?
Minimum Alternative Tax is an addition to the Income Tax, levied by tax authorities. It was introduced in 1997-98 to prevent companies from using loopholes and exemptions in the Income Tax Act to avoid paying tax. So, MAT acts as a threshold tax rate. Every company has to pay tax at this rate of 18% even if its effective tax rate is lower. However, there has been confusion over whether MAT is applicable for capital gains by foreign investors in the Indian markets.
What is Latest Policy on MAT?
Clarity finally came in the Budget speech, when Finance Minister Arun Jaitley announced that MAT would not be applicable for Foreign Portfolio Investors (FPIs). This means, foreign investors need not pay 18% tax on their book profits even if they do not have any taxable income as per IT Act. This was to be applicable from April 2015 onwards.
What is TAX Guys Says:-
The announcement about applicability from April 2015 opened the can of worms. This is because tax officials interpreted that since the MAT exemption applies only from April 2015, investors had to pay MAT in the previous years. They had originally not levied the tax on investors because of the initial ambiguity.
Tax Notices To FIIs:-
Tax officials then sent tax notices to over 100 foreign investors for the three years preceding 2015. They have demanded for tax payments, which amount to nearly Rs 40,000 crore, according to media reports. Some reports suggest that this figure could rise up to Rs 63,000 or $10 billion as more cases are unearthed. Since the tax notice applies to years gone by, it makes the tax rule 'retrospective'. At a time when the government is trying to simplify tax rules and avoid any retrospective taxation, this issue plays spoilsport.
What is the GOVT’s Call?
The finance ministry has been called to clarify the tax rule. The government said that MAT would not be applicable for investors trading from countries which have tax agreements like DTAA with India. DTAA stands for Double Taxation Avoidance Agreements. This includes 85 countries like Mauritius, Australia, Indonesia and US.(As per our data US + Mauritious + Singapore accounts for 64% of total FII investment in India. I am not counting other 82 countries!!)
Market Mood:-
Market has corrected by close to 2500 points in BSE and 500 points in NSE. The question comes – what is the TRUTH? What are the facts? Why the facts were not shared?
Manipulations:-
The figure of Rs.40000 Crs or Rs.63000 Crs is 100% misleading and it did its effect on market and USD exchange rate!! Those who wanted to make money made and small investors were taking for a ride again. This is your destiny because you follow the BLUE Channels.
If you remove the 85 countries from the list – you have approx Rs.700 crs tax demand and not Rs.40000 Crs demand as has been told to you!!
What is our call?
In last article we have said – there is a load – entry or exit – you choose. You can’t escape the same. But when you chose the entry load – you are sure for the cost you incur. In case of exit load – you will never come to know the true cost!!
Take advantage of our services and invest in market with TRUTH. If you cheat yourself – you are giving rights to others to cheat you. Be with TRUTH. Be With Destiny Management.
Have a Great Week Ahead.
MAT, MARKET and MANIPULATIONS
Greetings from Hitesh! Market is back to square one. Nifty moved from 8300 to 8900 and back to 8300. Investors are asking what next? Nifty 7700 or 8700 first? Let us look at the root cause of the market fall at this juncture.
Minimum Alternative Tax (MAT):-
What is it?
Minimum Alternative Tax is an addition to the Income Tax, levied by tax authorities. It was introduced in 1997-98 to prevent companies from using loopholes and exemptions in the Income Tax Act to avoid paying tax. So, MAT acts as a threshold tax rate. Every company has to pay tax at this rate of 18% even if its effective tax rate is lower. However, there has been confusion over whether MAT is applicable for capital gains by foreign investors in the Indian markets.
What is Latest Policy on MAT?
Clarity finally came in the Budget speech, when Finance Minister Arun Jaitley announced that MAT would not be applicable for Foreign Portfolio Investors (FPIs). This means, foreign investors need not pay 18% tax on their book profits even if they do not have any taxable income as per IT Act. This was to be applicable from April 2015 onwards.
What is TAX Guys Says:-
The announcement about applicability from April 2015 opened the can of worms. This is because tax officials interpreted that since the MAT exemption applies only from April 2015, investors had to pay MAT in the previous years. They had originally not levied the tax on investors because of the initial ambiguity.
Tax Notices To FIIs:-
Tax officials then sent tax notices to over 100 foreign investors for the three years preceding 2015. They have demanded for tax payments, which amount to nearly Rs 40,000 crore, according to media reports. Some reports suggest that this figure could rise up to Rs 63,000 or $10 billion as more cases are unearthed. Since the tax notice applies to years gone by, it makes the tax rule 'retrospective'. At a time when the government is trying to simplify tax rules and avoid any retrospective taxation, this issue plays spoilsport.
What is the GOVT’s Call?
The finance ministry has been called to clarify the tax rule. The government said that MAT would not be applicable for investors trading from countries which have tax agreements like DTAA with India. DTAA stands for Double Taxation Avoidance Agreements. This includes 85 countries like Mauritius, Australia, Indonesia and US.(As per our data US + Mauritious + Singapore accounts for 64% of total FII investment in India. I am not counting other 82 countries!!)
Market Mood:-
Market has corrected by close to 2500 points in BSE and 500 points in NSE. The question comes – what is the TRUTH? What are the facts? Why the facts were not shared?
Manipulations:-
The figure of Rs.40000 Crs or Rs.63000 Crs is 100% misleading and it did its effect on market and USD exchange rate!! Those who wanted to make money made and small investors were taking for a ride again. This is your destiny because you follow the BLUE Channels.
If you remove the 85 countries from the list – you have approx Rs.700 crs tax demand and not Rs.40000 Crs demand as has been told to you!!
What is our call?
In last article we have said – there is a load – entry or exit – you choose. You can’t escape the same. But when you chose the entry load – you are sure for the cost you incur. In case of exit load – you will never come to know the true cost!!
Take advantage of our services and invest in market with TRUTH. If you cheat yourself – you are giving rights to others to cheat you. Be with TRUTH. Be With Destiny Management.
Have a Great Week Ahead.
Follow me on Twitter @hiteshmparikh Or
on Whatsapp - +91-9869425399.
Live With Passion…Invest With Passion.
Hitesh Parikh.
Comments
Post a Comment