Published on Fri, Mar 02, 2007 at 08:52 | Source : Moneycontrol.com
Updated at Fri, Mar 02, 2007 at 20:06
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Venture capitalists in for a tough time
After the budget comes the fine print. And many venture capitalists and IT companies have found that the devil actually resides there reports CNBC-TV18.
After the budget comes the fine print. Many venture capitalists and IT companies have found that the devil actually resides in there, reports CNBC-TV18.
Venture capitalists like Ashok Wadhwa are not happy. That's because the finance minister will tax venture capital funds on income gained from selling investments in all but 6 sectors and that includes current investments.
"It is a big blow for venture capitalists, there is no consistency," says Ashok Wadhwa, CEO, Ambit Corporate Finance.
Construction companies have been hit even harder. They may have to pay taxes retrospectively for the past 5 years. That's because the Finance Minister claims the exemption was never theirs. Under Section 80 I-A of the Income tax act, infrastructure companies are entitled to tax exemption and so are construction companies to whom they sub-contract work. But with this amendment, the construction companies to which the work is sub contracted will have to cough up as well.
Besides, there's another hit for infrastructure units, which will lose tax benefits in case they merge or demerge.
"There is no logic behind the decision," says Sudhir Kapadia, Partner, BSR & Co
These retrospective amendments mean many companies will now have to make frequent rounds of the Income Tax department.
Venture capitalists like Ashok Wadhwa are not happy. That's because the finance minister will tax venture capital funds on income gained from selling investments in all but 6 sectors and that includes current investments.
