Revised Draft DTC: Capital Gains of FIIs Are Not Business Income

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Jun. 16 – There is a major change to the taxing of foreign institutional investments (FIIs) in the revised direct taxes code bill being proposed by the Indian government.

Under the new revised bill, capital gains of FIIs will not be treated as business income and hence not subjected to TDS. Instead they will be treated as capital gains.

The revised draft proposes to set a basic limit to exempt income of charitable organizations from tax. Any income beyond this limit will be subject to tax.

To address the concern that a non-profit organization may not be able to spend its entire receipts during the financial year itself, the bill proposes that up to 15 percent of the surplus or 10 percent of gross receipts, whichever is higher, be allowed to be carried forward to be used within three years.

Donations by a non-profit organization out of its accumulated surplus to another non-profit organization will not be considered as application for a charitable purpose.