One of the officials said the federal finance ministry is looking to relax a tax clause that would require the buyer of IDBI Bank to pay additional tax if the share price rises after the final bid.
The official said that the prices of shares increase after the government invites financial bids, noting that the new buyer has to pay tax on the increase in price from the time of bidding till the closure of the transaction” would be inappropriate”. ,
Om Rajpurohit, partner at tax firm AMRG & Associates, pointed out that if there is an increase in IDBI Bank’s share prices after the financial bids are formally placed, the difference in share prices would be “other” for the buyer as per tax laws. may be considered as “income”. “It will be taxable at 30% with surcharge and cess,” said Rajpurohit.
The government’s planned tax waiver would allow a potential buyer to avoid this levy.
run by the government and the state Life Insurance Corporation ,LIC) holds around 95% stake in IDBI Bank, and has invited initial bids from investors to buy 60.72% in the bank. Last week, it extended the deadline for submission of preliminary bids till January 7.
Once the government receives initial bids from buyers expressing interest, the reserve Bank of India It will examine them to see if they meet the central bank’s “fit and proper” criteria. India’s finance ministry did not immediately respond to requests seeking comment.