Updated September 11th, 2021 at 09:08 IST
CBDT clarifies on carrying forward of losses in case of change in shareholding in company
According to the press release issued by the CBDT on Friday, it states that the Finance Act, 2021 has amended section 72A of the Income Tax Act, 1961.
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With an aim to facilitate strategic disinvestment, the Central Board of Direct Taxes (CBDT) issued clarification regarding carrying forward losses in case of any change in shareholding. According to that, section 79 of the Income Tax Act, 1961 will not be applicable to any public sector company facing strategic disinvestment.
According to the press release issued by the CBDT on Friday, it states that the Finance Act, 2021 has amended section 72A of the Income Tax Act, 1961 as a part of strategic disinvestment. Further, it informs that in case of the amalgamated company with one or more companies subject to the conditions, the accumulated loss shall be deemed to be the loss, or as the case may be, allowance for unabsorbed depreciation of the amalgamated company for the previous year in which the amalgamation was effected.
It means the loss brought about in any earlier year before, and including, the earlier year of disinvestment will be taken forward and set away by the erstwhile public sector company.
Check their tweet:
CBDT issues clarification regarding carry forward of losses in case of change in shareholding due to strategic disinvestment. Section 79 of the Income-tax Act, 1961 not to apply in a case involving change in shareholding due to such strategic disinvestment. pic.twitter.com/hQ34YyfDyU
— Income Tax India (@IncomeTaxIndia)
Further, talking on the application of the provided relaxation it states that it will be applied from the previous year in which the company that was the ultimate holding company of such erstwhile public sector company immediately after completion of strategic disinvestment, ceases to hold, directly or through its subsidiary or subsidiaries, 51% of the voting power of the public sector company.
Image: Shutterstock
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Published September 11th, 2021 at 09:08 IST