BUDGET WISHLIST: Mergers and acquisitions

, JSW Steel Ltd

"Government support is necessary for the domestic industry to make acquisitions abroad, particularly when such takeovers become hostile".

Chamber Speak

Ficci
The government should encourage M&As through tax concessions. Dividends received from and capital gains arising on the sale of shares in foreign companies in which an Indian company has an equity interest of 10 per cent or more should be fully exempt from income tax or at least concessionary tax rates should be given.

Assocham
We have asked the government to formulate a comprehensive merger and acquisition policy to help corporate India in acquiring foreign companies. There is no such policy in place as of now.

EXPERTSPEAK: Amrish Shah

Suitable support must for M&As

In the corporate arena, M&A has become the buzzword. With the growing corporate appetite, it is critical that the government now introduces suitable fiscal measures for stimulating the ongoing M&A euphoria.

Removal of "tax-loss carry-forward" restriction on privately-owned companies upon change in its shareholding carrying voting powers beyond 49 per cent, can provide a level-playing field to such firms, along with, publicly owned companies, in an acquisition.

With the rising trend of off-market transactions under open offer, delisting and share buyback consequent to an upsurge in private equity and private investment in public equity deals, the government can consider tapping these transactions under the Securities Transaction Tax Regime (which so far has shown encouraging results), rather than as capital gains tax.

An introduction of tax amortisation on "acquired" goodwill would provide a fillip to M&A transactions in an emerging market like India.

The rationalisation of stamp law across the states to give uniform treatment to any merger/demerger transaction can help in eliminating aberrant planning and improving duty collections.

Taxes/duties do form critical aspects of any M&A transaction and consideration of above points of improvement to the existing legislations in the forthcoming Budget can provide further impetus to the growing M&A plans of India Inc.

The author is executive director, PricewaterhouseCoopers