Tax implications

Keerthivasan Velu (Querist) 14 May 2024 This query is : Resolved
Tax Implications on FAST TRACK MERGER UNDER COMPANIES ACT, 2013

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What are the tax implications of companies (Transferor and transferee) and share holders under Income Tax Act and GST Act - Consideration of issuance of shares

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This discussion explores the tax implications of fast-track mergers under the Companies Act, 2013, in India. Generally, such mergers are considered tax-neutral under Section 47 of the Income Tax Act, meaning they are exempt from capital gains tax for both the companies involved and their shareholders. Depreciation also shifts to the amalgamated company, and shareholder holding periods are inclusive. It's advised to consult with a CA for detailed guidance on specific issues.

T. Kalaiselvan, Advocate (Expert) 14 May 2024
Merger and Amalgamation; transaction involving a merger and demerger is generally considered as tax neutral transaction as Section 47 of the IT Act exempts such transactions from the purview of 'transfer'. Hence, such transactions are not amenable to capital gains tax.
Tax Neutrality for company – No capital gain implications [sec 47(vi)]; depreciation shifts to amalgamated company
Tax Neutrality for shareholders – No transfer a/c of amalgamation [sec 47(vii)] holding period is also inclusive.
Transfer of any capital asset is subject to capital gains tax in India; However, amalgamation enjoys tax-neutrality with respect to tax on transfer.
You can discuss in detail with your CA on all such further issues.

Keerthivasan Velu (Querist) 15 May 2024
Thank you so much sir.

T. Kalaiselvan, Advocate (Expert) 15 May 2024
You are welcome for your appreciations.

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