The Union Budget 2016-17 is
likely to exempt unsponsored American depository receipts (ADRs) and global
depository receipts (GDRs) based on underlying Indian securities from capital
gains tax. The move could be aimed at encouraging such listings.
Besides, such
exemptions might also come for ADRs and GDRs based on Indian unlisted stocks
and securities other than equities.
At present, India
Budget 2016 the law exempts ADRs and GDRs from capital gains tax if
they are backed by listed Indian shares; there is no such clarity if these
depository receipts are issued against unlisted shares or securities other than
shares.
Also, the relief is
currently given only to sponsored ADRs and GDRs, not the unsponsored ones.
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