I have invested some money in
Indian MFs through a financial
consultant for the past couple of
years. This year my consultant is
demanding a fee — apparently the
Securities and Exchange Board of
India has instructed them to do so.
Is this a fact? If so is there any
method to get around it. So far I
have made 15 percent profit from
the last three years. I have not withdrawn any investment. If I withdraw I have to pay income tax, and
if I bring back money to Australia I
would incur a loss due to difference
— P C Mann
MFs used to charge an entry load to investors and pay
the distributors their commission for bringing business
into their fold. The average rate of such an entry load for
equity funds was around 2.25 percent. However, for new
fund offers or for tax-saving schemes, the percentage used
to be higher. Now SEBI has ordered MFs not to charge
any entry load. SEBI desires the distributors should collect their fee from the clients directly. Your financial consultant was getting his compensation from you indirectly
without you realizing that the entry load charged to you
by the MF was essentially for paying him his commission.
Now SEBI has closed this channel and asked the consultants to negotiate with the client and collect their fees
directly from them based upon their service level.
Please note that SEBI has not specified any fee as such
that investors have to mandatorily pay to the agent. The
fee, if any, has to be negotiated between the client and the
I live in the United Kingdom. Recently, my father passed
away. I inherited a plot of land from him that I sold. He
had purchased it in 1983. Is there any exemption for such
money received or it is treated as a long term capital gains?
It will be treated as long-term capital gains. The cost of
acquisition will be the cost paid by your father. However,
indexation will be taken from the date you started owning
the plot. Tax on these gains can be saved by investing the
capital gains in capital gains tax saving bonds or by
investing the net sale proceeds in another house property.
I am based in the United States. My late mother had
invested Rs 100,000 ($1,600) in tax-saving bank deposit
through an India-based bank. She passed away this year
and I am in the process of streamlining and closing her
accounts and getting her investments, etc. transferred in
the names of the nominees, including myself. When I
approached the bank for terminating the abovementioned
tax saving deposit, they told me that since the lock-in peri-
od for the deposit is five years the
same cannot be prematurely
encashed. I find it strange that
the law requires a deposit to be
continued in the name of a
deceased person. Is the bank cor-
rect in its stand?
— Mira Vaz
You are right in observing that
any investment cannot be con-
tinued in the name of a deceased
person. The deposit should be
terminated and the amount
should be transferred in the
nominee’s name. You can refer
Bank Term Deposit Scheme,
2006 Notification No 203/2006,
dated 28-7-2006 to the bank officials concerned.
Point number 13 and 14 (reproduced below) specify the
procedure to be followed in case of the death of the depositor.
“13. Right of nominees
(1) In the event of the death of the holder of a term
deposit in respect of which a nomination is in force, the
nominee or nominees shall be entitled at any time before
or after the maturity of the term deposit to encash the term
(2) For the purpose of sub-paragraph (1), the surviving
nominee or nominees shall make an application to the
branch manager of the bank, supported by proof of death
of the holder and of deceased nominee or nominees, if any.
(3) If there are more nominees than one, all the nominees
shall give a joint discharge of the receipt at the time of
receiving the payment.
14. Payment to legal heirs
If a holder of a term deposit dies and there is no nomination in force at the time of his death, manager of the
branch of bank from where the term deposit was issued,
shall pay the sum due to the deceased, to his legal heirs.”
I have a Portfolio Investment Scheme broking and demat
account with an Indian bank through which I have been
buying and selling Indian equity shares. I have built up a
small portfolio of shares. I also have some mutual funds in
India. I was wondering about the taxation rules.
Are long-term/short-term capital loss arising out of equi-
ty sale applicable for off-setting long-term/short-term capi-
tal gains arising out of property respectively?
Can the long-term loss and short-term loss arising out of
equity sale be carried forward for say five years?
— Deep Soni
1) a. LTCG for shares sold on recognized stock
exchanges and equity based units of MF sold to the MF is
exempt and therefore, it cannot be setoff against any other
losses, including the carried forward losses of yesteryears.
Consequently long-term capital loss is also exempt and is
not available for any setoff
b. The STCG enjoys the concessional flat rate of tax at
2) Short Term Capital Loss can be adjusted against
either taxable LTCG or STCG earned from selling any
other property. LTCL can be setoff only against taxable
LTCG. Unadjusted loss (LTCL or STCL) cannot be setoff
against business income or income under any other head.
It can be carried forward for similar setoffs for as many as
I understand that a tax return needs to be filed in India if
income earned exceeds the basic exemption limit. Are dividend, STCG and LTCG to be included in this calculation of
income as there are certain tax concessions associated with
— Swamy R G
To arrive at the basic exemption limit only taxable
incomes need to be considered. Hence dividends or LTCG
from equity or equity MFs will not be considered.
However, STCG and taxable LTCG (from say property or
debt MFs) will have to be considered. If the same exceeds
the basic exemption limit (Rs 250,000 or $3,900 currently) for Nonresident Indians or Persons of Indian Origin, a
tax return needs to be filed mandatorily.
A N SHANBHAG SANDEEP SHANBHAG
Readers who wish to ask A N Shanbhag a question can fill in the following details and mail the coupon to: The Business Editor, India Abroad, 42 Broadway, 18th Floor, New York, NY 10004 Or fax it to 212-727 9730
A N Shanbhag is an investment consultant and author of In the Wonderland of Investment; How to Convert a Taxpayer into a Taxsaver; NRI Investment Guide. This article does not constitute tax or legal advice. Consult your tax or legal advisor before making any tax- or legally-related investment decisions. The authors may be contacted at firstname.lastname@example.org
Why is my financial consultant for mutual funds suddenly demanding a fee?
Anupam Singh, co-founder, Xplain.io, who is
now a part of the data management team at
Cloudera. “To hire a person, you make an
offer, the person accepts and you file her/his
H1B visa. Then, her/his lottery doesn’t come
through. And that is really hampering our ability to built companies here.”
“Even getting a Green Card is a nightmare,” Singh said. “I am an immigrant and this
uncertainty is very bad for business. You file an H-1B and you are not sure s/he will be
here or not. In our business we do not think like that.”
Answering the allegation that companies replace American employees with lowly paid
H1B candidates, Singh said, “If you pay less, someone will give a better offer, specially in
Silicon Valley. It’s (replacing Americans with H1B techies) a myth.”
“We absolutely need more H1B visa holders,” Prakash Bhalerao, the serial entrepreneur,
He added, “I think the government should
create a free trade market. These people will develop products and start their own com-
panies. That’s how intellectual property and intellectual wealth will be retained in socie-
“I got my visa in 1980,” Bhalerao said. “If they had not given me that visa I would have
gone to India. The amount of wealth I have created for others and myself and the
amount of jobs I have created, I would not have been able to do without the visa. People
are so highly skilled in this space these start-ups definitely need skilled people.
Restricting it means cutting your own legs.”
3Page A33 ‘How do you hire people
if there is uncertainty?’