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Pre-budget expectations: Union Budget 2019

Mergers & Acquisitions

In the run-up to Union Budget 2019, the cabinet committees have been set up to address the focus areas of growth and job creation across sectors. Expectations are rising to bring in reforms aimed at creating a tax and business friendly regime and enhancing foreign investments. Join us as our experts share their views around pre-budget expectations.

  • Provide exemption from section 56 to investors purchasing shares of companies undergoing NCLT process, under the Insolvency and Bankruptcy Code, 2016.
  • Widen/broaden definition of demerger to include adherence to accounting standards in place of transfer at book value.
  • Add goodwill as an asset on which depreciation should be allowed.
  • Convert existing dividend distribution tax into a dividend withholding tax which will help investors utilise tax credits in their home countries.
  • Provide exemption from section 56 in cases like issuance of shares, conversion of securities like preference shares / debentures into shares, etc.
  • Provide exemption from applicability of indirect transfer provisions for transfer of shares of listed companies.
  • Provide shareholder level exemption in case of indirect transfer of shares of Indian company in cases of merger or demerger of foreign companies.
  • Provide clarity on taxation of Alternate Investment Fund Category III including treatment of pass through taxation.
  • Realign Section 9A of Act, to provide for complete and unconditional exemption for Indian-managed offshore fund to be regarded as tax resident in India or having a business connection / PE in India considering that tax treaty benefits are no longer available to such funds.
  • Extend benefits of carry forward of losses under section 72A of the Act to service companies.
  • Provide suitable tax exemptions in case of merger of an Indian company into a foreign company (now permitted).
  • Extend Mauritius, Singapore, and Cyprus tax treaty benefits for shares acquired subsequent to 31 March 2017 on account of conversion of financial instruments held before 31 March 2017, or on account of extinguishment of shares held before 31 March 2017 in a scheme of amalgamation of two or more Indian companies or demerger of Indian company.
  • Ensure uniformity in stamp duty for Mergers & Acquisitions / Corporate restructuring transactions.
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