Budget 2018: Understanding the changes in the tax rules by Arun Jaitley

An analysis by Grant Thornton

Amendments to facilitate insolvency resolution  

Background
 

Business entities undergoing insolvency and restructuring proceedings are facing several challenges on the tax front.

Issue

A company undergoing insolvency proceedings under the Insolvency and Bankruptcy Code (IBC) is likely to undergo debt write-off or restructuring. Such write-off or waiver of the debt leads to a higher ‘book profit' and consequential higher Minimum Alternate Tax (MAT) liability. This had led to significant additional tax cost and was posing challenges to effective implementation of such proceedings.
 

Further, under the insolvency proceedings transfer of shareholding from existing shareholder to a new investor also resulted in change in