India announced on 2nd November that the Securities and Exchange Board of India (SEBI) will issue guidelines to abolish the rule that removes 'pass-through' status for venture fund investments 12 months after an investment goes public.
Opening the 'Indo-US Entrepreneurs Conference' in New Delhi, Finance Minister Yashwant Sinha said: 'I am happy to tell you that we have decided to do away with this stipulation and there will be no need for a venture fund to exit from the tax pass-through incentive after 12 months, irrespective of whether they are listed or unlisted. The choice of exit is now entirely left to the venture capital fund.'
India introduced 'pass-through' status for venture funds earlier this year, under which a fund would not be taxed but only its investors. However a fund would lose the tax exemption in respect of an investment if it didn't exit from the investment within twelve months of a public listing for that investment.
The minister said that the government will be maintaining a strict vigil on the misuse of the incentive and promised action against the guilty.
The finance minister said that various schemes for the information technology sector were being worked on as this had the potential to generate jobs for the teeming millions in India. Yashwant Sinha told the conference that the IT industry could prepare its 'wish list' in time for the pre-budget discussion and said he was not in favour of making modifications between budgets; but he asked the industry to avoid seeking incentives for staying competitive and told them to work out strategies to enhance productivity.
''We should get out of the mentality of sops in the form of interest rate or other ones and if we increase our productivity this will not be necessary,'' Sinha said.
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