CESTAT’s VCF Ruling – Dissecting Tax & Legal Ramifications

Episode Duration:
85 minutes

Episode Background:
A week ago, CESTAT Bangalore in case of ICICI Econet and Internet Technology Fund [Appellant] [TS-290-CESTAT-2021-ST] ruled that ‘carried interest’ (or ‘carry’ in trade parlance - which is a fund’s share of profits from managing investors’ money) is a ‘performance fee’ that would attract service tax. This ruling, which has gone against the aforesaid appellant (a Venture Capital Fund - “VCF” registered with SEBI) has kept the VCF ecosystem and fund advisors on tenterhooks, as fund managers are driven by the money earned from “carry”. Having said this, while the judgment has been delivered for a VCF, this will be equally relevant for any business where fund pooling is done by investors and is likely to have an equal bearing under the GST era.

What shall the episode cover?
Against this backdrop, Taxsutra is delighted to bring to you a special episode with none other than Advocate Rohan Shah titled, “CESTAT’s Ruling vis-a-vis Venture Capital Funds – Dissecting Tax & Legal Ramifications”.

Key Highlights
In this course, Mr. Shah shall comprehensively,

1. Threadbare analyze the aforesaid judgment,
2. Discuss the impact of this judgment on various trust/fund structures,
3. Examine how the ruling is contrary to the well-established industry practice particularly from an IDT Perspective
4. Decode the legal ramifications of not considering critical aspects relating to the arrangement entered into by the Appellant-VCF
5. Shed light on the likely way forward for the industry