Chapter VI Provisions Relating To Tax On Income Received From Venture Capital Company And Venture Capital Fund

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The Tax PublishersSection C CHAPTER VI PROVISIONS RELATING TO TAX ON INCOME RECEIVED FROM VENTURE CAPITAL COMPANY AND VENTURE CAPITAL FUND 108. Tax on income received from venture capital company and venture capital fund (1) Notwithstanding anything in this Code, any income received by a person out of investments made in a venture capital company or venture capital fund shall be chargeable to income-tax in the same manner as if it were the income received by such person had he made investments directly in the venture capital undertaking. (2) The venture capital company, the venture capital fund or the person responsible for making payment of the income on behalf of such company or fund shall furnish, within such time as may be prescribed, to the person receiving such income and to the prescribed income-tax authority, a statement in the prescribed form and manner, giving details of the nature of the income paid during the financial year and such other relevant details as may be prescribed. (3) The income paid by the venture capital company and the venture capital fund shall be deemed to be of the same nature and in the same proportion in the hands of the person receiving such income as it had been received by, or had accrued to, the venture capital company or the venture capital fund, as the case may be, during the financial year. (4) The provisions of Part B or Part C of this Code shall not apply to the income paid by a venture capital company or venture capital fund under this section. FROM NOTES ON CLAUSES Clause 108 seeks to provide that notwithstanding anything in this Code, any income received by a person out of investments made in a venture capital company or venture capital fund shall be chargeable to income-tax in the same manner as if it were the income received by such person had he made investments directly in the venture capital undertaking. In other words, this clause provides a pass through status to venture capital companies and funds and they would have no income-tax liability on any income received on account of investments made by them in any venture capital undertaking. The said clause further provides that the venture capital company, the venture capital fund or the person responsible for making payment of the income on behalf of such company or fund shall furnish, within the prescribed time limit, a prescribed statement giving the details of the nature of the income paid during the financial year and other relevant details, to the person receiving such income and to the prescribed income-tax authority. The said clause also provides that the income paid by the venture capital company and the venture capital fund shall be deemed to be of the same nature and in the same proportion in the hands of the person receiving such income as it had been received by the said company or the fund during the financial year. The said clause also clarifies that the provisions of Part B (Tax on distributed profits of domestic companies) or Part C (Tax on distributed income of mutual funds or life insurers) of the Code shall not apply to the income paid by a venture capital company or venture capital fund. FROM MEMORANDUM REGARDING DELEGATED LEGISLATION Clause 108 of the Bill provides that the venture capital company, the venture capital fund or the person responsible for making payment of the income on behalf of such company or fund shall furnish, within such time as may be prescribed, to the person receiving such income and to the prescribed income-tax authority, a statement in the prescribed form and manner, giving details of the nature of the income paid during the financial year and such other relevant details as may be prescribed. Accordingly, it is proposed to empower the Central Government to make rules in this regard for th purposes of this clause. SUBSCRIBE FOR FULL CONTENT

The Tax PublishersSection C
CHAPTER VI
PROVISIONS RELATING TO TAX ON INCOME RECEIVED FROM VENTURE CAPITAL COMPANY AND VENTURE CAPITAL FUND

108. Tax on income received from venture capital company and venture capital fund

(1) Notwithstanding anything in this Code, any income received by a person out of investments made in a venture capital company or venture capital fund shall be chargeable to income-tax in the same manner as if it were the income received by such person had he made investments directly in the venture capital undertaking.

(2) The venture capital company, the venture capital fund or the person responsible for making payment of the income on behalf of such company or fund shall furnish, within such time as may be prescribed, to the person receiving such income and to the prescribed income-tax authority, a statement in the prescribed form and manner, giving details of the nature of the income paid during the financial year and such other relevant details as may be prescribed.

(3) The income paid by the venture capital company and the venture capital fund shall be deemed to be of the same nature and in the same proportion in the hands of the person receiving such income as it had been received by, or had accrued to, the venture capital company or the venture capital fund, as the case may be, during the financial year.

(4) The provisions of Part B or Part C of this Code shall not apply to the income paid by a venture capital company or venture capital fund under this section.

FROM NOTES ON CLAUSES

Clause 108 seeks to provide that notwithstanding anything in this Code, any income received by a person out of investments made in a venture capital company or venture capital fund shall be chargeable to income-tax in the same manner as if it were the income received by such person had he made investments directly in the venture capital undertaking. In other words, this clause provides a pass through status to venture capital companies and funds and they would have no income-tax liability on any income received on account of investments made by them in any venture capital undertaking.

The said clause further provides that the venture capital company, the venture capital fund or the person responsible for making payment of the income on behalf of such company or fund shall furnish, within the prescribed time limit, a prescribed statement giving the details of the nature of the income paid during the financial year and other relevant details, to the person receiving such income and to the prescribed income-tax authority.

The said clause also provides that the income paid by the venture capital company and the venture capital fund shall be deemed to be of the same nature and in the same proportion in the hands of the person receiving such income as it had been received by the said company or the fund during the financial year.

The said clause also clarifies that the provisions of Part B (Tax on distributed profits of domestic companies) or Part C (Tax on distributed income of mutual funds or life insurers) of the Code shall not apply to the income paid by a venture capital company or venture capital fund.

FROM MEMORANDUM REGARDING DELEGATED LEGISLATION

Clause 108 of the Bill provides that the venture capital company, the venture capital fund or the person responsible for making payment of the income on behalf of such company or fund shall furnish, within such time as may be prescribed, to the person receiving such income and to the prescribed income-tax authority, a statement in the prescribed form and manner, giving details of the nature of the income paid during the financial year and such other relevant details as may be prescribed.

Accordingly, it is proposed to empower the Central Government to make rules in this regard for th purposes of this clause.