The Indian government is likely to waive some tax norms for the buyer of IDBI Bank to attract more bidders for the sale of majority stake in the lender, two government sources said on Tuesday after the Center extended the deadline for initial bids. People can be attracted.
The finance ministry is looking to relax a tax clause that would require the buyer IDBI Bank One of the officials said that if the share price rises after the final bid, additional tax will have to be paid.
The official said that the prices of shares increase after the government invites financial bids, noting that it would be “unfair” to ask the new buyer to pay tax on the increase in the value of the transaction from the time of bidding. until it closes. ,
Om Rajpurohit, partner at tax firm AMRG & Associates, pointed out that if there is an increase in IDBI Bank’s share prices after the financial bids are formally placed, the difference in share prices can be claimed as “other income” for the buyer. I can be considered. “It will be taxable at 30% with surcharge and cess,” said Rajpurohit.
The government’s planned tax waiver would allow a potential buyer to avoid this levy.
The government and state-run Life Insurance Corporation (LIC) hold around 95% stake in IDBI Bank, and have invited initial bids from investors to buy 60.72% in the bank. Last week, it extended the deadline for submission of initial bids till January 7.
Once the government receives initial bids from buyers expressing interest, the Reserve Bank of India will examine to see if they meet the central bank’s “fit and proper” criteria.
The finance ministry did not immediately respond to requests seeking comment.
Know your inner investor
Do you have guts of steel or are you a victim of insomnia regarding your investments? Let’s define your investment approach.
catch all business News, market news, today’s fresh news events and Breaking News Update on Live Mint. download mint news app To get daily market updates.