Center eases Air India disinvestment process, SPV will not attract TDS and TCS on assets transfer

The sale of government stake in the public sector airline company Air India (Govt Stake Sell) is progressing slowly. Now the central government has given tax exemption on the transfer of assets on behalf of Air India to SPV Air India Assets Holding Ltd. Before selling a stake in Air India, the national airline is transferring its assets to SPV Air India. The central government has said that TDS and TCS will not have to be paid on the assets that the company is transferring.

Strategic disinvestment of Air India will be completed easily

With a view to facilitating ease of facilitating strategic disinvestment of the national airline, sales have been exempted from TDS and TCS. For the sale of Air India, the government had formed a special entity Air India Assets Holding Limited (AIAHL) in the year 2019. Air India Group’s debt and non-core assets were to be transferred to this entity. According to the notifications issued by the Central Board of Direct Taxes (CBDT), no tax will be deducted under section 194Q on the transfer of goods by Air India to AIAHL.

Air India will not be considered as seller on assets transfer

No TDS will be deducted under section 194-IA of the Income Tax Act for payment received on the transfer of immovable properties by Air India to AIAHL. The CBDT said that for the purpose of deducting Tax Collection at Source (TCS), AIAHL will not be treated as a seller on the transfer of goods on behalf of Air India. It also said that the transfer of capital assets from Air India to AIAHL under the scheme approved by the Central Government will not be treated as a transfer for the purpose of income tax. The CBDT last week allowed new owners of erstwhile public sector companies to carry forward losses and make up for it from future profits.