Centre exempts taxes on transfer of assets by Air India, eases strategic disinvestment

In support of the strategic disinvestment of Air India, the Centre has exempted taxes on the transfer of assets by Air India to SPV Air India Assets Holding Ltd. Facilitating a move towards the disinvestment of the national carrier, the Central Board of Direct Taxes (CBDT) in a fresh set of notifications said that no tax deductible at source (TDS) shall be deducted in case of transfer of goods by Air India Ltd to AIAHL. In 2019, ahead of the Air India sale, the Central government had set up a special purpose vehicle Air India Assets Holding Ltd (AIAHL) for the transfer of debt and non-core assets of the Air India group.  

Further smoothening the disinvestment process, the government also informed that no TDS shall be deducted under section 194-IA of the I-T Act on payments made to Air India for transfer of immovable property to AIAHL. The CBDT pointed out that Air India would not be considered a 'seller' in order to deduct TCS with regard to the transfer of goods to AIAHL. It also added that the transfer of capital assets from Air India Ltd to AIAHL approved by the Centre would not be regarded as a transfer for the purpose of income tax.

Centre’s disinvestment target

In a bid to make disinvestment deals of ailing state-owned firms more attractive for investors, the board last week allowed new owners of erstwhile public sector companies to carry forward losses and set it off against future profits. At present, the Centre is aiming to sell 100 per cent of its stake in the state-owned national airline, including Air India's 100 per cent shareholding in AI Express Ltd and 50 per cent in Air India SATS Airport Services Pvt Ltd. 15 September is the last date for potential buyers to make their bids for stake in the airline.

Presenting the Union Budget 2021-22 in February earlier this year, Union Finance Minister Nirmala Sitharaman had announced that the disinvestment target for the Fiscal Year 2021-22 is Rs.1.75 lakh crore. As per the Centre's new disinvestment policy, every Public Sector Undertakings (PSUs) in all but 4 strategic sectors will be privatised. She also revealed that the IPO of LIC will be brought this year for which the requisite amendments shall be introduced. The minister had also asked the NITI Aayog to work on the next list of central public sector companies for strategic disinvestment.

(Image: PTI)