Page 26 - Union Budget, 2022

Union Budget, 2022

Incentivising Investment in Specific Sectors and Other Tax Concessions

Facilitating strategic disinvestment of public sector companies
• Sec 79(1) disallows carry forward and set off of losses by a company (not being a company in which public
are substantially interested) in case of change in shareholding, if the persons beneficially holding 51% or
more of voting power on the last day of the PY in which such change occurs and the PY in which such
losses were incurred, are not the same.
• It is proposed that Sec 79(1) shall not apply to an erstwhile public sector company (post strategic
disinvestment) provided that its ultimate holding company continues to hold, immediately after strategic
disinvestment, directly or indirectly, through its subsidiaries at least 51% of voting power of erstwhile public
sector company in aggregate.
• “Erstwhile public sector company” means a company which was a public sector company in earlier previous
years and ceases to be a public sector company by way of strategic disinvestment.
• “Strategic disinvestment” means sale of shareholding by the Central Government or any State Government
in a public sector company which results in reduction of its shareholding to below 51% along with transfer
of control to the buyer.
• Further, it has been specifically provided that if the aforesaid condition is not fulfilled by such company in
any PY after the completion of strategic disinvestment, losses shall be disallowed as per the existing
provisions of Sec 79(1) for such PY and subsequent PYs. However, in instances where losses have already
been carried forward and set-off by the erstwhile public sector company invoking the proposed amendment
mentioned supra, the claimed losses might be treated as deemed income in the hands of erstwhile public
sector company or rectification might be required to be filed in the year(s) of violation and the subsequent
losses would be dealt with in accordance with Sec 79(1).
AY 2022-23 and subsequent AYs.

The proposed amendment comes in the light of the newly approved policy of strategic disinvestment of public
sector enterprises by the Government which will provide a clear roadmap for disinvestment in all non-strategic
and strategic sectors.

Reduction in AMT rates for co-operative societies
• The rate of alternate minimum tax u/s 115JC for co-operative societies is proposed to be reduced from 18.5%
to 15%.

AY 2023-24 and subsequent AYs.

The Minimum Alternate Tax (MAT) rate for companies was reduced to 15% from 18.5% vide Taxation Laws
(Amendment) Act, 2019. The proposed amendment provides parity between companies and co-operative societies.

Exemption to Non-Residents and units transacting or operating in GIFT City

• Exemption of capital gains arising to a non-resident from transfer of non-deliverable forward
contracts entered with an OBU of IFSC was provided vide Finance Act, 2021.

• The same is now proposed to be extended to other products such as offshore derivative products or
over-the-counter derivatives as well.
• Further, it is proposed to exempt any income received by a non-resident from portfolio of securities
or financial products or funds, managed or administered by any portfolio manager on behalf of such non-
resident, in an account maintained with an OBU in an IFSC, to the extent such income accrues outside
India and is not deemed to accrue or arise in India.

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