Govt plugs loopholes in tax law, Mergers to be affected

NewDelhi Feb 3: The Finance minister on Thursday has presented the budget and the FM has announced some measures to plug the loopholes in the present system which are used by companies to avoid paying taxes and the government had said that it would align itself with global taxation laws .The Measures announced are

loans and advances to a shareholder or to an entity in which the shareholder is interested will be subject to DDT. This tax will be payable by the company and not by the shareholder or receiving entity. -Earlier there was no clarity in this regard which led to a lot of litigation.

Mergers and consolidations- the accumulated profits of the amalgamated company shall include the profits of the amalgamating company (i.e. the large company). earlier Many companies have just
announced mergers to avoid paying DDT.

Business entities operating in backward areas or engaged in low-cost housing projects will have to file their I-T returns on time to claim the appropriate tax benefits.

The government had also rationalized certain provisions of income tax to ensure that litigation is reduced and ease of compliance is enhanced.