Past losses of PSUs under strategic divestment can be set off: CBDT : Rashtra News
The change in income tax law has been made in a bid to make strategic divestment of PSUs more attractive, said experts, since normally such a set-off is not permitted.
Strategic divestment of Air India, Bharat Petroleum Corporation Ltd,
, , Pawan Hans et al is ongoing, and in various stages. The government has set a target of Rs 1.75 lakh crore from disinvestment for FY 22.
“In order to facilitate the strategic disinvestment, it has been decided that Section 79 of the Income-tax Act, 1961, shall not apply to an erstwhile public sector company which has become so as a result of strategic disinvestment,” the Board said.
Loss incurred in any previous year prior to, and including, the previous year of strategic disinvestment shall be carried forward and set off by the erstwhile public sector company, it added.
The relaxation will be available, only till the strategic investor retains at least 51% in the PSU after take over. In case the strategic investor’s shareholding falls below 51%, such relaxation will be withdrawn.
“The relaxation shall cease to apply from the previous year in which the company, that was the ultimate holding company of such erstwhile public sector company immediately after completion of the strategic disinvestment, ceases to hold, directly or through its subsidiary or subsidiaries, 51% of the voting power of the erstwhile public sector company,” the Board said.
Under normal tax provisions, without this relaxation, past losses of a company is not allowed to be set off, if there is change in majority shareholding of a company.
The Board added that necessary legislative amendments for the above decision shall be proposed in due course of time.
“In order to make disinvestment deals of ailing PSUs more attractive for strategic investors, the government has allowed that even after change in shareholding of such ailing PSUs due to transfer of shares in such PSUs by government to strategic investors, past losses of such PSUs will be allowed to be carried forward for set off against future profits,” said Suraj Nangia, head- government and public sector advisory at Nangia & Co LLP.
( News Source :Except for the headline, this story has not been edited by Rashtra News staff and is published from a economictimes.indiatimes.com feed.)
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