No capital gains tax on offmarket purchase of listed shares, ESOPs
criminal and civil cases,” a second dealer said.
A GM India spokesperson said that the company has a strong “partnership” with its dealers and is “working with them to provide appropriate support through this transition”.
“Our dealers are important partners in implementing our transition plan, which is focused on providing continuity and peace of mind for our customers.”
For instance, the company could facilitate the transition of some dealerships to “authorised service outlets” and it will “recognise some of the investments made in dealerships”, the spokesperson said, adding that these discussions are “confidential, and it would not be appropriate to discuss them publicly.”
GM’s dealersinIndiaallege that the company kept them in the dark even as it prepared a plan to exit the country. In November, the company renewed contracts with its dealers for one year as against a norm of a three years.
In an email addressed to Fada on May 21, GM India’s dealers advisory body claimed that General Motors was “cheating their dealers”. “Time and again we were assured that General Motors is working towards 10% market share and is developing a new product range for India. We have been made to invest on commitments that we would have a good future with General Motors,” it said in the email.
“We all are stuck with huge unsaleable stock of cars, which will be difficult to liquidate,” they said.
Fada took up the issue with General Motors but to no avail.
The Central Board of Direct Taxes (CBDT) on Tuesday notified a series of exemptions to the anti-abuse provision introduced in the Finance Act, 2017 to curtail money laundering through securities transactions.
The provision was aimed at preventing misuse of long- term capital gain tax exemption through such transactions.
Relief given to genuine transactions is based on suggestions received after the CBDT brought out a draft notification in April. Tuesday’s announcement says that several bona fide acquisition of securities on which the securities transaction tax (STT) is not paid, including employees stock options (ESOPs), FDI and courtapproved transactions, will be exempt from capital gains tax.
Finance minister Arun Jaitley introduced amendments in the Income Tax Act this year to deny capital gains tax exemption in all cases where STT is not paid, except the notified ones. The move was prompted by a recommendation by the Supreme Court-appointed special investigation team on black money which had highlighted the use of penny stocks in money laundering by inflating their price through market manipulation.
The notification says that when a listed company’s shares are acquired outside the stock exchange and STT is not paid, capital gains tax is chargeable, except in cases such as acquisition of ESOPs, acquisitions as part of the government’s disinvestment programme and purchase of shares by non-residents in line with the FDI policy.
Also, where an off-market transaction is approved by the Supreme Court, the National Company Law Tribunal, the Securities and Exchange Board of India or the Reserve Bank of India capital gains tax exemption is available even if STT is not paid.
Acquisition of shares under Sebi’s takeover code and off-market share purchases by venture capital funds and qualified institutional buyers are also exempt.
The exemptions are significant given the fact that many projects in stressed sectors could opt for bankruptcy proceedings in which lenders will explore various turnaround options including management and ownership change before considering liquidation and sale of physical assets.