Quick Summary
Finance Act, 2021 has amended section 72A of the Income-tax Act, 1961 (the Act) to inter alia provide that in case of an amalgamation of a public sector company (PSU) which ceases to be a PSU (erstwhile public sector company), as part of strategic disinvestment, with one or more company or companies, then, subject to the conditions laid therein, the accumulated loss and the unabsorbed depreciation of the amalgamating company shall be deemed to be the loss, or as the case may be, allowance for un
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FAQ :
The clarification aims to facilitate strategic disinvestment by allowing erstwhile public sector companies to carry forward their accumulated losses and unabsorbed depreciation.
Section 72A of the Income-tax Act, 1961 has been amended, and Section 79 will not apply to these companies.
The accumulated loss and unabsorbed depreciation of the amalgamating company (the PSU) shall be deemed to be the loss or unabsorbed depreciation of the amalgamated company, subject to laid-down conditions.
No, Section 79 of the Income-tax Act, 1961, shall not apply to an erstwhile public sector company that has become so as a result of strategic disinvestment.
The relaxation will cease to apply from the previous year in which the ultimate holding company, immediately after disinvestment, ceases to hold at least 51% of the voting power in the erstwhile public sector company.
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