India to Consider Taxing Subsidiary Mergers

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Sept. 15 – Government revenue authorities in New Delhi are considering taxing subsidiaries merging with their parent companies with a stamp duty ranging from 0.15 percent to 6 percent.

This may mean that the Indian Stamps Act 1899 that exempts stamp duty when a subsidiary merges with its parent company risks being dissolved when the proposal is submitted during the upcoming cabinet meeting.

Subsidiaries merging with their parent companies, either through debentures or transfer of shares or properties, are becoming more common as it allows companies to apply for larger loans.

The additional tax income is aimed at bolstering Delhi government income which took a hit as it spent more than Rs. 100 billion to prepare for the Commonwealth Games and struggled with the effects of the Global Financial Crisis.

For more advice on corporate tax in India, contact Dezan Shira & Associates at india@dezshira.com.