Trends in Trust Taxation for Investment Vehicles India

[CA. A V Seshadrinathan]

Investment trusts are facing challenges like

 

A. Concept of Investment gains being disputed as Income from being in the business of Investment

B. TDS mismatches issued by the AMC and the Fund

C. Pass through of Tax Credits  from Payers of Income via the Trust to the benificiaries

D. Application of avoidance rules to transfers made by collective vehicles domiciled internationally and investing into India

E. Concept of Substance, presence, control of investment decision of investment vehicles outside of India investing in India

AI Summary

Investment Trusts in India Face Taxation Challenges: Business Income Classification, TDS Mismatches, Tax Credit Pass-Through Issues Investment trusts in India are encountering several taxation challenges. These include disputes over whether investment gains should be classified as business income, mismatches in Tax Deducted at Source (TDS) issued by Asset Management Companies (AMC) and funds, and issues with the pass-through of tax credits from income payers via the trust to beneficiaries. Additionally, there are concerns about the application of tax avoidance rules to international collective vehicles investing in India and the significance of substance, presence, and control in investment decisions made by vehicles outside India. A participant inquired about clarifications on these issues.