Strategic disinvestment push: Buyers of PSU shares exempt from gift tax

The relaxation will stay as long as the strategic investor retains at least 51 per cent in the PSU after the takeover

The Central Board of Direct Taxes (CBDT) has exempted buyers from gift tax when they acquire equity shares in public-sector units (PSUs) through strategic disinvestment. Earlier the exemption was applied only in the case of sale of a PSU. The change in the income-tax law has been made to make strategic divestment in PSUs attractive, said experts.

Strategic divestment in IDBI Bank, Concor, and Shipping Corporation of India is in various stages and is expected to be concluded this fiscal year. The government has set a target of Rs 51,000 crore from disinvestment in FY24.

Expanding the non-applicability of Section 56(2)(x), also