Union Budget 2019: SME watch

Mergers and acquisitions

Our experts share insights and in-depth analysis from Union Budget 2019 on the critical issues and key reforms announced on 5th July, 2019.

Raising the minimum public holding in listed companies to 35% may have a substantial impact on several companies and could potentially trigger companies (primarily MNC owned listed companies) to consider de-listing. Introduction of buy-back tax for listed companies is also likely to have a negative impact as the shareholders lose beneficial rate of 10% tax and reduction in cost step-up. On the positive side, the merging of FPI and FDI investment limits for listed companies along with the relaxations proposed in specific sectors is welcome. Extending the exemption of super premium tax to Category II AIFs provides good relief but, other sub categories of funds (other than VCs) within the Category I AIFs continue to remain excluded. On demerger, the much awaited exemption on demerger to cases where assets and liabilities are recorded as per IndAS is finally provided. Surprisingly, not with a retrospective effect!. Other fixes include relaxation of conditions for carry-forward of losses in cases of start-ups and companies going through a resolution process.

Kalpesh Maroo
Partner, Deloitte India

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