3.9.2 Process Non-Tax Limits for Investors

This topic provides the systematic instructions to process non-tax limits for investors.

In some cases, investors can avail of tax exemption on their holdings in funds, up to certain prescribed limits, based on their eligibility for these exemptions. The limits would apply to holdings in both accumulated and non-accumulated funds. Whenever the prescribed limits are exceeded, the excess holdings would be subject to taxation.

Example

Let us suppose that an investor, Mr. Robert Brown, is eligible for exemption on tax to a limit of 100000 USD, on all his holdings in the AMC, in the following pattern:

Limit in accumulated funds: 20000 USD

Limit in non-accumulated funds:: 80000 USD

Mr. Brown is eligible up to the following limits in the following accumulated funds:

Carey Bugle Memorial Fund :10000 USD

Eastern Capital Income Fund :10000 USD

This would mean that if his investment holdings in any of these funds exceed these prescribed limits, the spillover holdings would attract taxation.

In Oracle FLEXCUBE Investor Servicing, you can maintain any such limits for eligible investors. By maintaining these limits and validating them whenever a transaction request is received from such an eligible investor, you can maintain the investor’s taxable and nontaxable holdings separately.

To set up the limits in this screen,

• Select the unit holder for whom you want to set up the non-tax limits, in the Client Information section.
• Specify the total tax-exemption limit applicable for the investor, in all funds both accumulative and non-accumulative, in the Total Sanctioned Limit field.
• Specify the identification document for the non-tax limits that are being set up.
• If the eligibility document for the non-tax limits option has been received, select the Maruyu Eligibility Status option in the Change Information Status field, and specify the date on which the document was received, in the Document Received Date field. Typically, the Document Received Date is defaulted to the application date.
• Specify the break up of the total limit that would be applicable, in accumulated and non-accumulated funds.
• In the Non-Taxable Limits for Non-Accumulated Funds section, indicate the limit for such funds.
• In the Non-Taxable Limits for Accumulated Funds section, select each of the funds for which the limit must be applicable in the Fund ID field, and specify the limit for each in the Allowed Limit field.
• Save your specifications.