Budget 2013: Clarification needed for income-tax rate on long term capital gains, says PwC India

There is a need for clarification in the Union Budget 2013 that the reduced income-tax rate of 10 % on long term capital gains applies also to exits from unlisted private companies for the PE/VC industry, said Gautam Mehra, Executive Director, Tax & Regulatory Services, PwC India.

Gautam Mehra also urged that the tax 'pass through' status which is currently available to Category I AIF, should be extended to Category II & III AIF also. Therefore, necessary amendments for same should be made in tax laws.

Furthermore, he said that the recommendations of the Shome Committee regarding tax on offshore transfers should be accepted(prospective applicability, exemption to group restructuring, transfer of shares of listed foreign company, etc).

Exemption to long term capital gains from off market sale of listed securities must be provided, said Sheetal Nagle, Associate Director – Tax & Regulatory Services, PwC India.

She added that the criteria defining "angel investors", for exempting private companies from tax on consideration received for issue of shares should be made clear.

Moreover, she said that ac lear understanding is needed for enforceability of rights culminating from put/call arrangements.