As a sweetener to denationalise the ailing nationwide provider Air India Ltd, the Central Board of Direct Taxes (CBDT) on Friday stated that the customer of a state-run firm can carry ahead losses of the erstwhile state-owned firm and declare as much as 30% tax rebate.
“To be able to facilitate strategic disinvestments, it has been determined that Part 79 of the Earnings-tax Act, 1961, shall not apply to an erstwhile public sector firm, which has change into so because of strategic disinvestment. Accordingly, the loss incurred in any earlier 12 months previous to, and together with, the earlier 12 months of strategic disinvestment shall be carried ahead and set off by the erstwhile public sector firm. The above leisure shall stop to use from the earlier 12 months wherein the corporate, that was the last word holding firm of such erstwhile public sector firm instantly after completion of the strategic disinvestment, ceases to carry, immediately or via its subsidiary or subsidiaries, 51% of the voting energy of the erstwhile public sector firm,” the finance ministry stated in an announcement.
The finance ministry stated crucial legislative amendments for the clarification shall be proposed in “due course of time”. A tax companion with a legislation agency, requesting anonymity, stated whereas the intent of Part 79 was to treatment the mischief of avoidance of tax via carrying ahead losses throughout change of possession, the part was technically getting utilized to such strategic disinvestment of PSUs. “Within the case of strategic disinvestment of a PSU, the intent is to not keep away from tax. The implication of it might be that the customer would have the benefit of offsetting losses towards future revenue of his enterprise. The cap for carrying ahead such losses is eight years. It could additionally imply the funding for the customer will come from his future tax financial savings. This isn’t unfair,” he added.
Air India, which has suffered losses yearly since its merger with Indian Airways in 2007-08, has accrued losses to the tune of ₹70,820 crore until March 31, 2020, minister of state for civil aviation V.Okay. Singh informed Rajya Sabha in August.
Responding to a query from a member of Parliament, Mahesh Poddar, Singh stated main causes for Air India’s losses embrace high-interest burden on debt, improve in competitors, particularly from low-cost carriers, excessive enter value, and the adversarial impression of alternate fee fluctuation.
The federal government goals to conclude the sale of Air India earlier than March. Up to now, the Tata group is taken into account to be the front-runner. The nationwide provider, which has by no means made a internet revenue since its merger with Indian Airways in 2007, has incurred a lack of about ₹9,500- ₹10,000 crore within the 12 months ended March 31, up from the ₹8,000 crore loss recorded within the earlier 12 months, a senior official of the airline had earlier informed Mint.