In four separate notifications, the Central Commission on Direct Taxes (CBDT) clarified that AIAHL will not be considered a “buyer” in the event of a transfer of goods by Air India under the plan, and that Air India will not be considered a “buyer”. considered as “” seller “when the goods are transferred by the latter to AIAHL.
In line with the government’s plan to make Air India attractive to potential buyers, Air India’s fixed assets will be transferred to AIAHL, a special-purpose vehicle created to hold half of the loans of the airline, four of its subsidiaries and secondary assets.
In one of the notifications, the Council notified the transfer of the fixed assets from the airline to the special purpose vehicle AIAHL.
“The Central Government hereby notifies the transfer of fixed assets under a plan approved by the Central Government from Air India Limited, as a ceding public sector enterprise, to Air India Assets Holding Limited, as as the transferee public sector company, ”the board said in the Saturday notification.
This will come into effect on April 1, 2022 and will apply to the 2022-2023 and subsequent tax years.
Withholding tax (TCS) exemption was made to make the sale of Air India more attractive to investors. The national carrier is currently undergoing a strategic divestment, with the government selling its entire stake and management control to the buyer. Financial offers for the same are expected by September 15. In accordance with the TCS provisions introduced last year, a seller with a turnover of more than Rs 10 crore during the previous year, is required to collect the TCS at 0.1% on the sale of goods to any person for a total value greater than Rs 50 lakhs during the current financial year. The shares of a company sold on the stock exchange would also be considered “property” and are subject to the TCS.
“In order to make the Air India divestment transaction financially lucrative for the strategic investor and given the huge amount of sale consideration involved, the government exempted Air India from this share sale transaction. of assets from the TCS provision, ”said Shailesh Kumar, partner at Nangia & Co LLP.