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SEBI demands tax concessions on real estate investment trusts

Ahead of the Budget, the Securities and Exchange Board of India (SEBI) has taken up with the government taxation issues for the proposed Real Estate Investment Trusts as well infrastructure  corporate bonds. 
“We have come out with a discussion paper on Real Estate Investment Trust and are hoping to get it implemented soon.  Our rules are ready, we have taken up with the government that these must be given a pass-through certificate status so far as tax status is concerned,” SEBI chairman U K Sinha said at a summit organised by Skoch Consultancy Services. 

Sinha expressed the hope that the government will consider the demand favourably. 

“The moment there is a clarity on that, we will come out with our regulations,” he said.

Sinha also  wanted a tax clarity on infrastructure corporate bonds for  foreign institutional investors (FIIs). 

“In the infrastructure sector, if a bond is issued and there is a FII, which is investing in that, what is the level of tax with that entity? If  it is vastly different from the withholding tax which is imposed on others, should there be different set of rules for FIIs and domestic institutional investors? These are the issues we are looking at,” Sinha said. 

He  also  wanted the government to enact a  law  to replace  an ordinance which provides  SEBI the regulatory jurisdiction of  all  unregulated entities  that take  deposits of at  least  Rs  100  crore.  

“An ordinance is an ordinance. It has a limitd life. I am hopeful that the government will consider that this ordinance is converted into an act very soon,” he  said.    

The SEBI chairman said there are still a large number of unregulated fund raising activities. These are coming under various names–chit funds or nidhi companies, housing schemes. 

“That menace has not still been fully controlled.”

Sinha disclosed  that  since the  ordinance  was promulgated, SEBI has taken action in more than 25 cases. “We have passed our orders, we have stopped them from raising money.”

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