Amid a sharp volatility in stock market, which continues to show selling pressure, the Central Board of Direct Taxes said on Monday the draft cicular relating to taxation on sale of stocks does not refer to FIIs and rejected suggestions that it was 'ambiguous'.
"The draft circular does not refer to foreign institutional investors at all. Nor does it purport to deal with any case or class of cases. The draft circular was posted to provide greater clarity for the guidance of assessing officer," CBDT said in a statement to quash media reports quoting tax consultants that the draft was ambiguous.
Terming as 'totally incorrect and inappropriate', reports that investors would have to live at the mercy of the tax officials, CBDT said: "It is unfortunate that newspapers should publish self-serving opinions".
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The statement came in the face of a jittery stock market, which after opening storngly, recorded a fall of over 350 points within minutes of resuming trading.
However, the statement said the question whether a person purchasing and selling shares or securities is a trader or an investor "remains a question of fact. The assessing officer would have to take note of the totality of the facts and circumstances before reaching a conclusion."
The position has been made clear in paragraph 10 of the 1989 circular and in the last paragraph of the present draft cicular, the statement said.
Justifying the draft cirular, it said there had been a number of judgements of courts since the issuance of 1989 guidelines, which the authorities updated and a draft circular was posted on the webside a few days ago.
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