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Tax on any gain to firms under insolvency code under hair cut be waived: ASSOCHAM to Govt.

 

Wednesday, September 13, 2017


New Delhi, September 13, 2017: Apex industry body ASSOCHAM has written to the government, seeking a slew of tax reliefs, including exemption from tax on any hair cut taken by the banks in the form of a waiver of interest accrued,  for the debt -ridden companies which are sought to be revived under the Insolvency and Bankruptcy Code (IBC) .
 
“Where any outstanding liability, inclusive of any accrued interest is waived in accordance with the approved Resolution Plan, such waiver / write-back should not be subject to tax under both normal and Minimum Alternate Tax (MAT) provisions of the Income-tax Act, 1961,” the ASSOCHAM said in its letters to the Secretaries in the Department of Financial Services, Corporate Affairs Ministry and the Central Board of Direct Taxes (CBDT).
 
The chamber has also sought exemption from Section 50CA of the Income Act for the companies which are being revived under the IBC. This Section provides that the computation of capital gains would be done on the basis of fair value of the shares of the company even if these are transferred under the IBC package below the fair value.
 
Likewise, no minimum alternate tax (MAT) was payable by a sick industrial company on its book profits from the year in which it became sick in accordance with the provisions of Sick Industrial Companies (Special Provisions) Act, 1985. “ It is recommended that similar reliefs should be extended to the Corporate Debtor whereby its book profits, after the approved Resolution Plan is effected”. 
 
The ASSOCHAM has also sought exemption from the GAAR (General Anti Avoidance Rules) for all the parties in the revival plan if it has been approved by the National Company Law Tribunal (NCLT).
 
“The resolution plans approved after factoring in these reliefs/concessions will result in quick revival of assets, freeing up liquidity for banks for further lending, increased economic activity, job creation, increased contribution to the exchequer and will have multiplier effect on the associated economy,” the chamber said in its letter to different wings of the government.
 
Besides, the re-rating of assets post approved Resolution Plan will improve balance sheets of the banks thereby lowering capital infusion requirement from the Government. Further, a quick and timely resolution to the stressed assets with positive outcome implemented in a transparent manner will improve India’s “Doing Business” ranking thereby ensuring participation from global players and resultant capital inflows, ASSOCHAM Secretary General Mr D S Rawat said. 
 
 
About ASSOCHAM:

ASSOCHAM initiated its endeavour of value creation for Indian industry in 1920. It was established by promoter Chambers, representing all regions of India. Having in its fold over 400 Chambers and Trade Associations, and serving over 4.5 lakh members across India. ASSOCHAM has emerged as the fountainhead of Knowledge for Indian industry, which is all set to redefine the dynamics of growth and development in the Knowledge Based Economy. More information available on www.assocham.org
 
For further details, please contact:
 
Manju Negi
AVDHESH SHARMA   
ASSOCHAM
ASSOCHAM   
011-46550509; +919810910911
011-46550508; +918527639419

 

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