GAAR- News that is up there on all news channels and financial discussions. Much talked about and being debated on for quite sometime now. What is GAAR and y is it being so debated on?
Apparently, GAAR is terrible for FII. GAAR attempts to ensure that FIIs actually pay tax on profits they realise from the conduct of market transactions in India. It doesn't matter that the tax be paid in India, mind.Even if they pay it in some other jurisdiction, and can prove this, they needn't pay in India.
Now FIIs don't like that. Why don't they like it? Because (i) they would have to reveal the SOURCE of the money they are bringing in and (ii) they would have to reveal the destination of the money going out.
As a small participant in the financial markets. Here's what happens to me. FIRST my income gets taxed at source. Then I take my post-tax income and invest it in the market. Then, when this generates a profit, it gets added back to my income and I pay tax on it yet AGAIN. Unlike these nice FII people who need to be treated SPECIALLY.
We are talking about institutional investors here, not direct investors. These are NOT people who are building factories, setting up universities or research laboratories, bringing in new technologies, strengthening our roads, dams, ports or power stations. They are gamblers playing short term punts in the Indian markets.
We are talking about institutional investors here, not direct investors. These are NOT people who are building factories, setting up universities or research laboratories, bringing in new technologies, strengthening our roads, dams, ports or power stations. They are gamblers playing short term punts in the Indian markets.
If they think the Rupee is going to harden against the dollar, they will happily buy Indian paper and exit it as soon as it delivers their profit benchmark. If they think Indian equities are going to take a hammering, they will not hesitate to sell short and cover as the markets tank. They are not putting money into the ground, which having gone in, takes a few years to start producing an yield, and what is more, is nearly impossible to liquidate and exit. They are putting money into NSE, BSE, NCDEX and so on.
An individuals money at least isn't hot money. Everyone knows and the government makes sure it is revealed where is the individual income coming from And that fully honest money is treated systematically worse than money that some FII shuffles out of India and then shuffles back.......
How is that a fair tax system?
An individuals money at least isn't hot money. Everyone knows and the government makes sure it is revealed where is the individual income coming from And that fully honest money is treated systematically worse than money that some FII shuffles out of India and then shuffles back.......
How is that a fair tax system?
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