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Govt exempts TDS/TCS on transfer of assets by Air India to SPV


NEW DELHI: The government has exempted taxes on the transfer of assets from Air India to SPV Air India Assets Holding Ltd, a measure designed to facilitate the strategic divestment of the national airline.
As a precursor to the sale of Air India, the government in 2019 established a special purpose vehicle, Air India Assets Holding Ltd (AIAHL), for the transfer of debt and non-core assets of the Air India group.
In a set of notifications, the Central Board of Direct Taxes (CBDT) said no TDS will be deducted under section 194Q in case of transfer of goods by Air India Ltd to AIAHL.
In addition, no TDS will be deducted under section 194-IA of the TI Act on payments made to Air India for the transfer of real property to AIAHL.
The CBDT also said that Air India would not be considered a “seller” for the purposes of TCS’s deduction with respect to the transfer of goods by AIAHL.
He said that the transfer of capital assets under the plan approved by the central government from Air India Ltd to AIAHL would not be considered a transfer for income tax purposes.
Last week, the CBDT had allowed new owners of old public sector companies to carry forward losses and offset them against future profits.
This is an effort to make the divestment agreements of distressed SOEs more attractive to strategic investors.
The government is seeking to sell 100 percent of its stake in the state-owned national airline, including Air India’s 100 percent stake in AI Express Ltd and 50 percent in Air India SATS Airport Services Pvt Ltd.
The strategic sale has reached the crucial phase, with September 15 being the last date for the presentation of financial offers by potential buyers.
The government wants to complete the long-pending strategic sale of Air India this fiscal year. The divestment target for this fiscal year has been set at Rs 1.75 million lakh.

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