FINANCE BILL 2021
The Finance Bill 2021 was introduced in the Indian Parliament (Finance) on February 1, 2021 As part of our Budget proposals, Bill (see our Direct tax-related budget proposals are eligible for ergo Here It was approved by the Certain amendments to the Indian Parliament These amendments can be significant. Included the clarification on equalization levy Provisions and some important changes From a perspective of mergers and acquisitions, such As the deemed value provision for slump Rationalization and sale of tax provisions Related to the dissolution or reconstitution a Partnership firm. After you have received the It was given by the President on March 28th. Force (Finance Act).
These are the key amendments and their effect Below are the highlights: Acquisitions and mergers Amendments Consideration for sale Slum sale applicable The current provisions are Calculation of capital gains upon a slump Section 50B of the Income tax provides for sale Act 1961 (IT Act), requires capital Gains/losses to be calculated based on The difference between actual and fake sales Consideration and ‘net worth’ of such Transferred undertaking In computing These assets, which are depreciable and have a net worth, are called “net worth”.
As per IT Act and other assets shall also be taken As per their book value (except where noted). Assets for which full deduction is allowed These are the benefits that can be accessed under section 35AD Nil The Finance Act introduced the following: Fairness is deemed fiction Market value of the undertaking Division (computed in the prescribed way) is considered to be the value Considerations for computing capital Slum sale cases show gains In addition,
Calculating the net worth, which is the sum of all the assets. Considered the ‘cost-of-acquisition’ of such Investing in goodwill of business or profession (other Than Goodwill is acquired through the purchase of a Previous owner) would be required to be Taken as NIL. We are still waiting for notification about the rules For computing the fair market value It would be fascinating to ‘undertake’.
See the interplay between deemed valuation Compared to the actual sales consideration How the valuation will be arrived at Basis an itemized approach The lumpsum approach and the question of whether it is worth it. The value of liabilities would also be taken into consideration When arriving at the deemed value. Effective from FY 2018, the amendment will be in effect 2020-21 is applicable and therefore, Slum sale deals made during FY 2020-21 With the deemed value It includes provisions for slump sale It would be vital to obtain a valuation Report on Record to Demonstrate Respect the provisions.
Rationalization of provisions Concerning tax on dissolution Reconstitution of specific entities The Finance Bill proposed a levy Capital gains tax for a partnership firm Association of Persons (AOP), or Body In the case of Distribution of assets to a partner member, depending on the situation. Dissolution or reconstitution Firm/AOP/BOI But, there’s more. As the proposals were made, clarity was sought They were ambiguous.