State Bank of India, ICICI Bank, Axis Bank among others will get exemption from the income tax for their investments in Yes Bank under the reconstruction scheme as the finance ministry has amended the relevant provisions in this respect.
Besides, the exemption has been provided to shareholders, who receive unlisted shares of companies or their subsidiaries following resolution plan approved by the National Company Law Tribunal (NCLT) in cases related to oppression and mismanagement. Shareholders of IL&FS pursuant to the government plan would come under this scheme, experts say.
Those whose land is being regularised under the government plan in Delhi would also receive such exemption.
Amit Maheshwari, tax partner at AKM Global said,”The amendment has removed genuine hardships being faced by taxpayers in these special situations.”
These special situations needed to be addressed as this is not the case where any undue benefit has accrued to recipients, he said.
Aravind Srivatsan, partner at Nangia Andersen said,”Given the volatile current market scenario, the income tax rules provide some cushion for the investors to consider schemes offered to investors on high profile rescue packages where public interest is involved and there is a need to prevent erosion of investor savings.”
For this purpose, the Central Board of Direct Taxes has amended relevant rules inserted through the Finance Act, 2019.
The rules relate to deemed taxation of the shareholders who get shares below the fair market prices.
Under the Yes Bank reconstruction scheme, investor bank and investors are allowed to take shares of the Bank at a price of Rs 10 of the face value of Rs 2. The market price of Yes Bank share stood at Rs 25.60 close on Tuesday on the Bombay Stock Exchange.
Besides the banks cited above, Federal Bank, IDFC First Bank, Bandhan Bank invested in Yes Bank, according to information given to the exchanges in March.
(with inputs from Abhijit Lele)