Tax breaks for venture funds

Tax breaks for venture funds
ENS ECONOMIC BUREAU

NEW DELHI, DECEMBER 30: The government has significantly liberalised the guidelines for venture capital and provided tax exemption on dividend and long term capital gains from investments made on or after April 1, 1999 by way of equity shares in a venture capital fund.

According to an official notification, a new Section 10 (23FA) has been inserted in the Income Tax Act for this purpose. It was further pointed out that for availing the exemption, a VCF or VCC would be required to be approved by the central government in accordance with the prescribed guidelines.

Also, a VCC or VCF has been permitted to make investment exceeding the earlier ceiling of 40 per cent in the equity capital of one Venture Capital Undertaking (VCU).

In addition,the existing limit of investment by a VCF/VCC upto 20 per cent of its total monies raised or total paid up share capital in one VCU has been increased to 25 per cent.