Section 79 of Income Tax Act shall not apply to erstwhile PSUs: CBDT
The previous year of strategic disinvestment shall be carried forward and set off by the erstwhile public sector company,” the CBDT.
New Delhi: The Central Board of Direct Tax in its clarification on September 11, 2021 states that Section 79 of the Income Tax Act shall not be applied to PSUs. For more attractive and strategic disinvestment deals the government has allowed the public sector companies to carry forward losses to attract strategic investors.
“Accordingly, the loss incurred in any previous year prior to, and including, the previous year of strategic disinvestment shall be carried forward and set off by the erstwhile public sector company,” the CBDT under the Finance Ministry said in a statement.
The relaxation, it added, will cease to apply from the previous year in which the company, that was the ultimate holding company of such erstwhile public sector company immediately after completion of the strategic disinvestment, ceases to hold 51 percent of the voting power of the erstwhile company, PTI mentioned.
Section 79 of the Income Tax Act involves the carry forward and set off of losses in the case of companies. If there is a change in majority shareholding (51 percent) of the company then the company's past losses are not allowed to be set off, mentioned Suraj Nangia, Head, Nangia Andersen, a government and public sector advisory.
Join PSU Connect on WhatsApp now for quick updates! Whatsapp Channel
