September 13, 2021 12:13 PM
The government has further sweetened the proposed privatisation of Air India. Central Board of Direct Taxes sweetens Air India privatisation offer. The Central Board of Direct Taxes (CBDT) has exempted the airliner from deducting tax collected at source (TCS).
According to provisions introduced last year, any seller is required to collect TCS at 0.1 per cent on sale of goods to any person for aggregate value exceeding Rs 500,000.
For the purpose of this provision, shares of a company sold off stock exchange are considered as goods and therefore are subject to TCS, explained Shailesh Kumar, partner at Nangia & Co. The notification says that Air India Assets Holding Ltd, a special purpose vehicle for holding the airline’s loans among other things, will not be considered buyer and Air India will not be considered seller.
As a sweetener to privatize the ailing national carrier Air India Ltd, the Central Board of Direct Taxes (CBDT) on Friday said that the buyer of a state-run company can carry forward losses of the erstwhile state-owned company and claim up to 30% tax rebate annually.
“In order to facilitate strategic disinvestments, it has been decided that Section 79 of the Income-tax Act, 1961, Central Board of Direct Taxes sweetens Air India privatisation offer, shall not apply to an erstwhile public sector company, which has become so as a result of strategic disinvestment.
The above 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 finance ministry said in a statement.