Government company & psu

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Querist : Anonymous

Querist : Anonymous (Querist)

23 August 2015 As per S. 2(45) of CA 2013, Govt. company is defined as the one in which the paid up share capital is not less 51% held either by the Central or State Govt. or combination of both. PSU is also defined in a similar manner, then what is the difference between the two, which results in application of different tax provisions to each of those entities? Can anybody elaborate?
Thanks in advance.

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)
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23 August 2015 Both are the same. I don't see any different tax provisions. Please tell me any different tax provisions.

Querist : Anonymous

Querist : Anonymous (Querist)

23 August 2015 Sorry there was a framing issue in this query. I meant that in case of individuals employed in a govt. Company and PSU, the tax treatment is different.What is the reason for this differentiation and based on 51% criteria, both stand on same footing, then how does tax treatment vary?

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)
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24 August 2015 Only the individuals employed in Govt, the tax treatment is different in view of their salary is regulated by Govt. Tax treatment of individuals employed in Govt companies, PSU and public/private companies is the same.

Querist : Anonymous

Querist : Anonymous (Querist)

24 August 2015 Can regulation of salary be a ground for providing additional tax benefits. If by definition both the entities are govt. entities, can a PSU, also not be classified as Govt.Company? Either a Govt. company has to be classified as PSU or vice versa. There has to be solid ground for this classification. There can possibly be only one category of govt. enterprise, if all the other parameters remain the same.What is the logic of classifying the two entities in two different categories?

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)
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24 August 2015 PSU and Govt companies are one and the same Govt companies are classified as PSU. PSU can be classified as Govt company.

Querist : Anonymous

Querist : Anonymous (Querist)

24 August 2015 Sir, if I go as per logic provided by you, that PSU and Govt. Companies are one and the same then there should be no differentiation in tax treatments between govt. and PSU employees. Either PSU employees should get tax benefits provided to govt. employees or govt. employees should be subjected to same tax treatment as PSU employees. Is my understanding correct?

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)
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24 August 2015 No difference in tax treatment between Govt company and PSU employees.
You are confused with Govt employees(different treatment) and Govt company employees(no different treatment).

Querist : Anonymous

Querist : Anonymous (Querist)

24 August 2015 According to you there is no difference in tax treatment. I would like to ask you a simple question that if a person is employed in say Air India Ltd., would he/she be considered as PSU employee and eligible for retirement benefits as per S. 10 fully or would the person be eligible for benefits subject to the limits specified in say S. 10 (10AA) & 10 (10)

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)
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24 August 2015 Person employed in Air India ltd would be considered as PSU employee and retirement benefits are exempted subject to limits.

Querist : Anonymous

Querist : Anonymous (Querist)

25 August 2015 Sir, you have mentioned that the limits under s. 10 would apply. If that is the case then this contradicts your earlier statement that there is no difference between govt. & PSU employees for tax purposes. Highly conflicting situation.

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)
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25 August 2015 You are confused between Govt employees and Govt company employees. Only For Govt employees no limits. For Govt company employees limit will be applicable.