Do large investors get better deal than small?
Q: My father had a property in Ajmer comprising of land with building. He was advised by a lawyer that being a Muslim he could make an oral gift of the property. Accordingly, he made the gift in my favour. My brothers are disputing it on the ground that an oral gift is not valid in law and, therefore, I cannot be recognised as the owner of the property. Please throw some light on the correct legal position. A:
Under the Islamic Law, an oral gift is permissible. However, the Supreme Court of India has held that, to make a valid oral gift, three conditions should be fulfilled. First, there should be intention on the part of the donor to make the gift. Secondly, the gift must be accepted by the donee. Lastly, the donee must take possession of the gift. All these three conditions should be fulfilled in order that it may be treated as a valid gift.
Therefore, your father will have to prove that he wished to make the gift of the immovable property to you by stating that he made a declaration of his desire to gift the property to you in the presence of atleast two witnesses. The acceptance of the property as a gift by you has to be demonstrated by showing that you took steps to get the property mutated in your name. Thereafter you have to show that you have taken possession of the property and you have paid municipal tax, water tax and electricity charges in respect of the property. In case the property is let out, the rent should be received in your name. If all these facts are established, the gift made by your father to you would be valid in law.
Q: My son wants to pursue PhD level education in Britain. The cost of that will be funded by me by taking a loan from a bank in India with which I have fixed deposits. I have taxable income in India and have been filing my tax return in respect of such income. I want to know whether I will get any tax incentive for the interest which I pay to the bank in respect of the loan. Will my son be subject to any visa restrictions after he completes his PhD in the UK? A: As you have taxable income in India, you will be eligible to claim a deduction under section 80-E of the Incometax Act in respect of the interest which you will pay on the loan taken by you from the bank for funding the higher education of your son. You will be entitled to claim the deduction for eight financial years beginning with the year in which you start paying interest to the bank. However, if the loan is to be repaid over more than eight years, you will get no deduction from the ninth year onwards.
The British government has put a limit on employment visas to be given to foreigners. However, starting from autumn this year, PhD level occupations will be exempt from the Tier 2 (General) restriction. By 2021, the British government will remove all restrictions on the number of visas granted to foreign skilled workers. Hence, your son would not have any difficulty in getting an employment visa for a PhD level job.
Q: I have been regularly investing in units of mutual funds in India. I have been told that some large investors get a better deal than an ordinary investor does. This does not create a level playing field. Are steps being taken to curb this practice? A: The Securities and Exchange Board of India has been receiving complaints from retail investors alleging discriminatory practices in favour of large investors. Therefore, Sebi is taking steps to ensure that alternative investment funds should treat each class of investors fairly and uniform terms should be made applicable. Generally, ‘side letters’ have been issued to cover some of the differential terms. This is generally done in the case of Private Equity funds.
The format of the private placement memorandum differs from fund to fund. Sebi has been insisting on maintaining a degree of uniformity in the fund document and that key information should be stated upfront which would allow investors to make an informed decision. Such information would cover risk factors, particulars about the management, performance fee structure, etc. However, the industry feels that differential terms are normal for private equity funds globally because large amounts have to be raised through private placement from high net worth individuals and, therefore, special rights have to be given to them.
The British government has put a limit on employment visas to be given to foreigners