Latest Expert Exchange Queries

Make your inventory and invoicing software GST Ready from Binarysoft info@binarysoft.com
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: TAX RATES - GOODS TAXABLE @ 4% :: VAT RATES :: VAT Audit :: form 3cd :: list of goods taxed at 4% :: ICAI offer Get Windows 7,Office 2010 in Rs.799 Taxes :: ACCOUNTING STANDARDS :: due date for vat payment :: articles on VAT and GST in India :: ARTICLES ON INPUT TAX CREDIT IN VAT :: ACCOUNTING STANDARD :: Central Excise rule to resale the machines to a new company :: cpt :: TDS :: empanelment
 
 
Mergers and Acquisitions »
 Building market institutions can help M&As move faster
 How corporate mergers and acquisitions impact small investors
 Merger control triggers and thresholds in India
 Centre eases pre-merger filing normsa
 Mergers and Acquisitions in Indian banking sector not threat for fintech players
 This part of our journey is value discovery: Kumar Mangalam Birla
 Health care mergers, acquisitions lead surge in global deals
 Tata Teleservices could be acquired by Airtel as India heads towards four-operator market
 Deals of the day-Mergers and acquisitions june 28, 2017
 Why is Avendus Capital behind most large e-commerce deals in India?
 India one of most attractive merger and acquisitions destinations in Asia.

No tax impact on shareholders after Sun-Ranbaxy merger
April, 08th 2014

Shareholders of Ranbaxy are bound to be concerned about the tax implications, if any, arising on the share-swap in the Ranbaxy-Sun Pharma deal. Under the arrangement, Ranbaxy shareholders will receive 0.8 shares of Sun Pharma for each share of Ranbaxy. This exchange ratio represents an implied value of Rs 457 for each Ranbaxy share — a premium of 18% to Ranbaxy's 30-day volume-weighted average share price and a premium of 24.3% to Ranbaxy's 60-day volume-weighted average share price, computed as on the closing date of April 4.

Sun Pharma's official release adds, "The transaction is expected to represent a tax-free exchange to Ranbaxy shareholders who are expected to own 14% of the combined company."

No transfer under tax laws

The share-swap transaction, wherein for one share of Ranbaxy shareholders will get 0.8 shares of Sun Pharma, is not considered as a 'transfer' under tax laws and no capital gains will arise in the hands of the Ranbaxy shareholders.

Hold allotted Sun Pharma shares for 12 months

Long-term capital gains on sale of shares via a stock exchange are currently exempt from capital gains tax and only a nominal securities transaction tax is payable. However, to qualify as a long-term capital asset, the share must be held for twelve months.

"Tax laws, while defining long-term capital assets, also provide for beneficial treatment to shareholders covered under merger agreements in respect of their new shares, by including the period of shareholding of the original shares," explains Punit Shah, co-head (tax) at KPMG.

In other words the period of holding of the original Ranbaxy shares would also be considered. Thus, assuming that Mr. A had purchased 100 Ranbaxy shares in January 2012, he will now get 80 shares of Sun Pharma. If he sells the Sun Pharma shares soon after they are allotted to him, the sale will still be of a long-term capital asset (as the date for computing the period of holding will be from January 2012). Ranbaxy shareholders wishing to sell their Sun Pharma shares should ensure that the cumulative period of holding is at least twelve months, to avoid any capital gains tax. As of March 31, 2014, the general domestic public holding in Ranbaxy with nearly 533 lakh shares was approximately 13%.

 
 
Home | About Us | Terms and Conditions | Contact Us
Copyright 2017 CAinINDIA All Right Reserved.
Designed and Developed by Binarysoft Technologies Pvt. Ltd.
Content Management System development CMS development Content Management Solutions CMS Solutions Content Management Services CMS Services CMS Software

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