RED HERRING PROSPECTUS Dated August 24 ... - Globus Spirits

Tax. However, the aforesaid income shall be taken into account in computing the Book
profit and income tax payable under section 115JB.
3. According to the provisions of section 54EC of the Act and subject to the conditions
specified therein, capital gains not exempt under section 10(38) and arising on transfer
of a long term capital asset shall not be chargeable to tax to the extent such capital
gains are invested in certain notified bonds, subject to a ceiling of Rs. 50 lakhs, within
six months from the date of transfer. However, if the said bonds are transferred or
converted into money within a period of three years from the date of their acquisition,
the amount of capital gains exempted earlier would become chargeable to tax as long
term capital gains in the year in which the bonds are transferred or converted into
money.
4. The income by way of short term capital gains or long term capital gains [in cases not
covered under section 10(38) of the Act] realized by FIIs on sale of shares of the
company would be taxed at the following rates as per section 115 AD of the Act
• Short term capital gains, other than those referred to under section 111A of the
Act shall be taxed @ 30% (plus applicable surcharge & education cess).
• Short term capital gains, referred to under section 111A of the Act shall be taxed
@ 15% (plus applicable surcharge and education cess)
• Long Term capital gains @ 10% (plus applicable surcharge and education cess)
(without cost indexation)
It may be noted here that the benefits of indexation and foreign currency fluctuation
protection as provided by section 48 of the Act are not applicable.
5. Section 88E provides that where the total income of a person includes income
chargeable under the head “Profits and gains of business or profession” arising from
taxable securities transactions, he shall get rebate of STT paid by him in the course of
his business. Such rebate is to be allowed from the amount of income tax in respect of
such transactions calculated by applying average rate of income tax.
6. As per section 90(2) of the Act, provisions of the Double Taxation Avoidance Agreement
between India and the country of residence of the FII would prevail over the provisions
of the Act to the extent they are more beneficial to the FII.
(v)
BENEFITS AVAILABLE TO MUTUAL FUNDS
As per the provisions of Section 10(23D) of the Act, any income of Mutual Funds
registered under the Securities and Exchange Board of India Act, 1992 or Regulations
made there under, Mutual Funds set up by public sector banks or public financial
institutions or authorized by the Reserve Bank of India would be exempt from income
tax. However, the Mutual Funds shall be liable to pay tax on distributed income to unit
holders under Section 115R of the Act.
(vi)
VENTURE CAPITAL COMPANIES / FUNDS
In terms of section 10(23FB) of the Act, all Venture capital companies/funds registered
with Securities and Exchange of India, subject to the conditions specified, are eligible for
exemption from income tax on all their income, including profit on sale of shares of the
Company.
B. BENEFITS AVAILABLE UNDER THE WEALTH TAX ACT, 1957
Shares of the Company held by the shareholder will not be treated as an asset within the
meaning of section 2(ea) of Wealth Tax Act, 1957, hence no Wealth Tax will be payable on the
market value of shares of the Company held by the shareholder of the Company.
C. BENEFITS AVAILABLE UNDER CENTRAL EXCISE TARIFF
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