Budget 2018 may waive NOC to streamline transfer of stressed assets
To further ease the insolvency and bankruptcy process and streamline the acquisition of stressed assets, Union Finance Minister Arun Jaitley may do away with no-objection certificates required for asset transfers.
This comes under Section 281 of the Income-Tax Act, and it will be waived for transactions between companies under insolvency and those buying their assets.
Apart from this, the Budget may also get rid of stamp duties on transfers of stressed assets. The Central Board of Direct Taxes (CBDT) has said that the minimum alternate tax will not be applicable to firms undergoing insolvency proceedings.
Besides, the finance minister’s speech is also likely to dwell on three biggest "disruptive" reforms carried out in recent times, demonetisation, the goods and services tax, and insolvency proceedings.
Sources say Jaitley will present a report card of all three measures and may reveal new details, apart from the data out in the public domain.
Section 281 of the Income Tax Act, 1961, requires an assessee to obtain the permission of the assessing officer before creating a charge on or transfer of certain assets, including land, building, machinery, manufacturing facilities, and others.
Sources who have interacted with the finance ministry as well as the ministry of corporate affairs in the run-up to the Budget say that deliberations are taking place to remove the provision for companies acquiring stressed assets. "This, along with the issue of the MAT and stamp duty, will ease the process of acquiring assets of companies that have undergone the bankruptcy process through the National Companies Law Tribunal (NCLT)," said a source.
With promoters out of the picture, companies that are eligible to buy stressed assets are said to have made representations to the government to make the acquiring process easier. The stamp duty on purchases of assets varies from state to state. But since the insolvency process comes under the Centre, states will be consulted on any decision to remove the stamp duty.
Earlier this month, the CBDT relaxed norms for levying the minimum alternate tax (MAT) on companies facing corporate insolvency proceedings. According to Section 115JB of the Income Tax Act, MAT is levied on book profits after deducting the amount of loss brought forward or unabsorbed depreciation, whichever is less.