There is some hope again that the Gujarat government may do away or modify the earlier decision to have its companies hand over 30 per cent of their profits before tax (PBT) for public welfare activity. To begin with, in the wake of Gujarat State Petroleum Corporation’s coming Rs 3,000- 3,500-crore public offer, it is contemplating absolving this unit from the order’s ambit.
“The move to collect funds from profit-making PSUs for welfare activities has not been called off. The state government is considering giving concession in the case of GSPC,” said a senior government official.
At least four profit-making PSUs whom Business Standard spoke to said the move was likely to be discontinued, as the government was yet to issue a circular on the matter this year.
The directive was issued in September 2008, wherein all profit-making PSUs were asked to contribute 30 per cent of their PBT to Gujarat Socio Economic Development Society (GSEDS), an official body, for welfare activities. The government was aiming to raise about Rs 500 crore from the six listed PSUs, while it was planning to raise about Rs 2,000 crore in all from the 13 profit-making PSUs, sources said. The move had caused quite a stir last year, especially in the case of listed PSUs, with some angry minority shareholders threatening to move court.
There was a sharp decline in share prices too at the time.
PSUs such as Gujarat Mineral Development Corporation (GMDC) and Gujarat State Petronet approved the move despite opposition by minority stakeholders. GSPC had also got shareholders’ approval last year, for parting with 30 per cent of its PBT. However, shareholders’ approval had not come in Gujarat Alkalies and Chemicals and Gujarat Natural Fertilisers.
“All contributions were to be exempted under Section 35 AC of the Income Tax Act, reducing the actual impact. For instance, GMDC was aiming to contribute about Rs 122 crore to GSEDS for projects approved by the Central Board of Direct Taxes. Despite shareholders’ approval in some cases, all the PSUs are yet to transfer the amount, as the eligible projects have not been identified,” said an official close to the development.
