Latest Expert Exchange Queries
sitemapHome | Registration | Job Portal for CA's | Expert Exchange | Currency Converter | Post Matrimonial Ads | Post Property Ads
 
 
News shortcuts: From the Courts | News Headlines | VAT (Value Added Tax) | Service Tax | Sales Tax | Placements & Empanelment | Various Acts & Rules | Latest Circulars | New Forms | Forex | Auditing | Direct Tax | Customs and Excise | ICAI | Corporate Law | Markets | Students | General | Indirect Tax | Mergers and Acquisitions | Continuing Prof. Edu. | Budget Extravaganza | Transfer Pricing
 
 
 
 
Popular Search: cpt :: due date for vat payment :: ACCOUNTING STANDARD :: ARTICLES ON INPUT TAX CREDIT IN VAT :: articles on VAT and GST in India :: VAT Audit :: ACCOUNTING STANDARDS :: TAX RATES - GOODS TAXABLE @ 4% :: list of goods taxed at 4% :: TDS :: ICAI offer Get Windows 7,Office 2010 in Rs.799 Taxes :: VAT RATES :: form 3cd :: Central Excise rule to resale the machines to a new company :: empanelment
 
 
News Headlines »
 Directions under section 119 of the Income-tax Act, 1961
 Securities excluded from GST ambit in revised Bill
 GST dilemma: Hope fades for new tax regime
 5nance.com launches tax investment platform
 Is government tapping your phone?
 Income tax department to use analytics to look for discrepancies in bank accounts
 GST Council fails to break deadlock over indirect tax regime, next meet on Dec 11 and 12 to hammer out differences
 Invoking Writ Jurisdiction For Income Tax Matters
 How to file income-tax returns online
 How Income Tax Returns Are Scrutinised
 All About New Income Disclosure Scheme to make Demonetisation successful

Tata Tea to save huge amount of tax via demerger route
March, 27th 2007

Tata Tea is likely to save substantial tax outgo on the proposed demerger of its north Indian tea plantation into a separate company as the West Bengal government is yet to bring into force the Indian Stamp (West Bengal Amendment) Act 2003. The Act has already been passed by the state legislature.

With Rs 360 crore of assets being demerged, the company is set to save up to 10% of the value or about Rs 35 crore of stamp duty charges, legal experts associated with demergers said.

"The Indian Stamp (West Bengal Amendment) Act 2003, passed by the state legislature, has not yet been brought into force and no stamp duty is levied as per prevailing practice.

However, Tata Tea Ltd (TTL) and Amalgamated Plantations Private Ltd (APPL) may share any additional cost or savings including stamp duty, if held to be payable, in such proportion as mutually agreed," the scheme of arrangement between TTL and APPL has mentioned.

And this, tea industry officials and merger consultants say, would help Tata Tea save about 10% of the value of the assets that would have been payable as stamp duty.

"Till now, there is no stamp duty on companies demerging assets in states like West Bengal, Assam and Tamil Nadu, among others, while duties at 8-10% are levied in several other states. However, the Indian Stamp (West Bengal Amendment) Act 2003 has not yet been notified and so companies registered in the state demerging their assets would not have to pay the duties till the new law is made effective," a partner in an audit firm said.

Tata Tea is demerging its north Indian plantation assets spread over Assam and West Bengal. The assets consist of four tea estates in West Bengal, covering 2,094 hectares, and 20 estates in Assam covering 12,667 acres. Employees numbering 31,800 would also be transferred to APPL, the demerged entity.

"We understand that the new Act hasn't been notified yet because the state government wants to promote restructuring of the tea industry, which is passing through a crisis," said the finance director of a large tea plantation company.

Earlier, the south Indian plantation business was restructured and out of 25 estates, 17 were transferred to Kanan Devan Hills Plantation Company Pvt Ltd, principally owned by former employees of TTL.

The north Indian assets, including 24 tea estates but excluding packaging centres at Nonoi, Kellyden and Dam Dim estates, have been valued at Rs 359 crore.

While Tata Tea might save on stamp duty, it will have to shell out 'salami' to the state. Salami is a duty that the state charges for transfer of land, in this case tea estate.

At present, the state government charges Rs 15,000 per hectare as salami on transfer of tea estate. This was introduced by the West Bengal government through a notification in 1994. A temporary relief of 40% discount was provided between 2001 and 2004.

 
 
Home | About Us | Terms and Conditions | Contact Us
Copyright 2016 CAinINDIA All Right Reserved.
Designed and Developed by Binarysoft Technologies Pvt. Ltd.
Article Management Solutions System Article Management Software S

Transfer Pricing | International Taxation | Business Consulting | Corporate Compliance and Consulting | Assurance and Risk Advisory | Indirect Taxes | Direct Taxes | Transaction Advisory | Regular Compliance and Reporting | Tax Assessments | International Taxation Advisory | Capital Structuring | Withholding tax advisory | Expatriate Tax Reporting | Litigation | Badges | Club Badges | Seals | Military Insignias | Emblems | Family Crest | Software Development India | Software Development Company | SEO Company | Web Application Development | MLM Software | MLM Solutions