Securitisation distribution tax :Vinod Kothari's detailed analysis

Please see my article, in FAQ format, on the securitisation distribution tax:

www.vinodkothari.com/secsummit.htm

(link towards the bottom of the page)

And do join me on linkedin for a seamless interface in matters pertaining to securitisation:

http://www.linkedin.com/groups?gid=4959627&trk=hb_side_g

best
Vinod Kothari

Dealing with securitisation distribution tax in India: Urgent steps may be needed

The Finance Bill 2013 has been passed without any changes to the securitisation tax proposals. Hence, a distribution tax of 25% - 30% becomes effective from 1st June.

Within a very short time, market participants may have to devise strategies to deal with the situation. Please see my article at:
http://vinodkothari.com/Securitisation_choosing_between_knit_picking_and_fabric_changing.pdf

Indian Securitisation Foundation seeks rollback of Budget tax proposals on securitisation

See Economic Times coverage at:
http://economictimes.indiatimes.com/news/news-by-industry/banking/finance/banking/indian-securitisation-foundation-seeks-rollback-of-securitisation-tax-proposal/articleshow/19415726.cms

India needs to tame SARFAESI Act

See article by Vinod Kothari and Soma Bagaria in January 2013 issue of the Chartered Secretary here:
http://www.icsi.edu/docs/cs/January%202013/January2013.pdf

Securitisation trusts get stay on demand

While the Budget 2013 might have created a different sort of problem altogether, it seems the recovery of demand from mutual funds or securitization SPVs, holding them as non-tax-transparent, is to wait for some time. See the ruling of the Bombay High court here:
http://timesofindia.indiatimes.com/city/mumbai/No-public-authority-can-ignore-principle-of-legal-precedent-Bombay-high-court/articleshow/18991394.cms

Let no one make a mistake  - this ruling does not decide anything at all on the substance of the case. It is only a ruling on the recovery of demand pending an appeal. Hence, the issue of whether existing securitisation transactions are tax transparent still remains.

In the meantime, the Indian securitisation industry is expected to be reacting soon on the Budget 2013 proposals.

Budget 2013 proposals on securitisation

The Budget 2013 changes completely the tax structure of securitisation transactions in India. They wanted to be good, but ended up confused. See my detailed analysis at:
www.vinodkothari.com/secart.htm

Please do sign up for securtisation mailing list on:
www.vinodkothari.com/mailinglist.htm

You are missing a lot if you are not on the groups there.

best
Vinod Kothari
vinod@vinodkothari.com

SARFAESI Amendment bill passed in Lok Sabha

News items on 11th Dec 2012 say that the Enforcement of Security Interests and Debt Recovery Laws Amendment Bill has been cleared by the Lok Sabha.

The Bill is insignificant, and makes minimum amendments to the SARFAESI Act.

One amendment, for example, relates to multi-state cooperatives, which, owing to certain court rulings, were currently excluded from the purview of the law.

Yet another amendment is the right of a secured creditor to file a caveat before DRTs, so that borrowers do not obtain ex parte stay.

Yet another amendment allows an ARC to convert debt into equity.

Text of the Bill is here: http://www.prsindia.org/uploads/media/Enforcement/Enforcement%20of%20Security%20Interest%20and%20Recovery%20of%20Debts%20Laws%20Amendment)%20Bill%202011.pdf