CA SANKET GARG
Quick Summary
The world is on the brink of moving at exponential speed towards Fourth Industrial Revolution. The Fourth Industrial Revolution builds on the digital revolution, representing new ways in which technology becomes embedded within societies and even the human body. The Fourth Industrial Revolutio
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FAQ :
Currently, there is no direct way to monetise or transfer self-generated business losses from one company to another. While this can be done indirectly through mergers and acquisitions, it's a time-consuming, costly, and complex process.
The article suggests allowing companies to sell their previous years' business losses on the open market, similar to how other tax credits or incentives are traded. This would provide immediate cash flow to loss-making companies.
For selling companies, benefits include reduced working capital crises, effective utilisation of losses, protection from unwanted acquisitions, and improved financial statements. For buying companies, it means reduced direct tax burdens with fewer legal complexities than M&A.
Potential conditions include filing income tax returns by the due date, processing by the Income Tax Department, and limitations on the period of utilisation or transferability, such as a ten-year restriction on buying from the same seller.
The government could benefit from additional tax generation, an increased taxpayer base, reduced instances of scams and company collapses, and overall economic improvement, potentially lowering the need for relief packages and bailouts.
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