Sona Comstar IPO Date, Review, Price & Market Lot Details

Sona Comstar IPO to hit the market on 14 June 2021 and closes on 16 June 2021. The company to raise ₹5550 crores via initial public offer.

Sona BLW Precision Forgings aka Sona Comstar filed a DRHP in February 2021 and the Sona BLW IPO launch date is 14 June and closes on 16 June 2021. The company plans to raise ₹5,000 crore through the initial share sale which will consist of a fresh issue of equity shares worth Rs 300 crore and an offer for sale (OFS) by existing shareholders. Incorporated in 1995, Sona BLW Precision Forgings Limited is one of the leading automotive technology companies in India. The company is primarily engaged in designing, manufacturing, and supplying high-quality mission-critical automotive components such as differential assemblies, gears, conventional and micro-hybrid starter motors, etc. 

As per CRISIL Report, Sona Comstar is one of the top 10 auto-component manufacturers. In 2020, Sona Comstar was listed in top 10 global players for the differential bevel gear segment and among the largest exporters of starter motors in India. They supplies their products in India, USA, Europe, and China. They have 9 manufacturing and assembly facilities across the USA, India (6), China, and Mexico. Check out Sona BLW Precision Forgings IPO details.

Sona Comstar IPO Review

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Sona Comstar IPO Date & Price Band, Market Lot, Allotment & Listing date

IPO Open	14th June 2021
IPO Close	16th June 2021
IPO Size	Approx Rs.5550 Crores
Fresh Issue	Approx Rs.300 Crores
Offer for Sale	Approx Rs.5250 Crores
Face Value	Rs.10 Per Equity Share
Price Band	Rs.285 to Rs.291 Per Share
Listing on	BSE & NSE
Retail Portion	10%
Employee Disc	Rs. - per share
Equity	- Shares
Minimum Lot Size	Minimum - 51 Shares -  1 Lots
Minimum Amount	Rs. 14,841/-
Maximum Lot Size	Maximum – 663 Shares – 13 Lots
Maximum Amount	Rs.1,92,933/-
Basis of Allotment	21st June 2021
Refunds	22nd June 2021
Credit to Demat Account	23rd June 2021
Listing Date	24th June 2021

Objectives of the Issue:

The net proceeds from the IPO will be utilized towards the following purposes;

• Repayment or prepayment  in fully or partially of company's borrowings.
• General corporate purposes.

Sona Comstar Company Audited Financial Report Summery

Rs. in Crores
	Revenue	Expense	PAT	Ratio(%)	EPS
2018	Rs.625.9	Rs.494.8	Rs.77.57	12.39%	2.59
2019	Rs.702.5	Rs.548.0	Rs.173.18	24.65%	3.01
2020	Rs.1043.8	Rs.888.8	Rs.360.34	34.52%	7.06
2021-9M	Rs.1029.6	Rs.818.6	Rs.155.46	15.09%	2.71

About Sona Comstar

We are a technology and innovation driven company. With a strong focus on R&D, we develop mechanical and electrical hardware systems, components as well as base and application software solutions, to meet the evolving demands of our customers. We are one of a few companies globally, with the ability to design high power density EV systems handling high torque requirements with a lightweight design, while meeting stringent durability, performance and NVH specifications, enabling EV manufacturers to enhance the vehicle range, acceleration and the overall efficiency.  We aim to capture the growth trend in revenue realization per component with increasing electrification by continuously investing in R&D to develop and deliver new and innovative systems and components. With our customers continuously focusing on weight reduction in EVs to enhance the range, augment the vehicle’s acceleration and improve overall efficiency, we have been developing solutions and alternatives for improving the power density and lightweighting of our differential assemblies and EV Traction Motors (BLDC and PMSM) and motor control units through our R&D efforts. With the evolving vehicle electrification trend, a key area of our focus is on integrating the powertrain and the drivetrain components by creating an integrated drive unit. Control systems and software are becoming a critical part of powertrains. We have developed extensive in-house capability to develop embedded systems and application software, along with integration capabilities to offer our customers a complete solution.

We are among the limited number of players who are well placed to combine our motor and driveline capabilities to offer a compelling value proposition to our EV customer base. Integrated drive units have three key components namely, differential assembly, high voltage traction motors and high voltage inverters. Since we already manufacture electric drive motors and inverters for electric 2-wheelers and hybrid PVs, as well as differential assemblies for battery electric passenger vehicles, we are in a unique position to integrate the three key constituents of the electric powertrain into a single matched unit, offering an efficient and compact solution to EV OEMs.

Company Address

Sona BLW Precision Forgings Limited
Sona Enclave Village, Begumpur Khatola,
Sector 35, Gurugram, Haryana–122004
Telephone:+91 0124 476 8200
Contact Person: Ajay Pratap Singh
Vice President (Legal), Company Secretary and Compliance Officer
E-mail:investor@sonacomstar.com
Website: www.sonacomstar.com
Corporate Identity Number: U27300HR1995PLC083037

Sona Comstar IPO Lead Managers

Kotak Mahindra Capital Company Limited
Credit Suisse Securities (India) Private Limited
JM Financial Limited
J.P. Morgan India Private Limited
Nomura Financial Advisory and Securities (India) Private Limited

Sona Comstar IPO Registrar
KFin Technologies Private Limited
(formerly known as Karvy FintechPrivate Limited)
Selenium Tower-B, Plot 31 & 32 Gachibowli,
Financial District, Nanakramguda,
Serilingampally,
Hyderabad, Telangana–500032
Tel: +91 40 6716 2222
E-mail: sonacomstar.ipo@kfintech.com
Investor Grievance E-mail: einward.ris@kfintech.com
Website: www.kfintech.com
Contact Person: M Murali Krishna
SEBI Registration No.: INR000000221


Sona Comstar IPO FAQs

What is Sona Comstar IPO?
Sona BLW Precision Forgings IPO is a main-board IPO. They are going to raise ₹5550 Crores via IPO. The issue is priced at ₹285 to ₹291 per equity share. The IPO to be listed on BSE & NSE.

When Sona Comstar IPO will open?
The IPO is to open on 14 June 2021 for QIB, NII, and Retail Investors.

What is Sona Comstar IPO Investors Portion?
The investors' portion for QIB 75%, NII 15%, and Retail 10%.

How to Apply the Sona Comstar IPO?
You can apply Sona BLW Precision Forgings IPO via ASBA online via your bank account. You can also apply ASBA online via UPI through your stock brokers. You can also apply via your stock brokers by filling up the offline form.

What is Sona Comstar IPO Size?
Sona BLW Precision Forgings IPO size is ₹5550 crores.

What is Sona Comstar IPO offer Price?
Sona BLW Precision Forgings IPO offer Price is ₹290 to ₹291.

What is Sona Comstar IPO Minimum Lot Size?
The minimum bid is 51 Shares with ₹14,841.

What is Sona Comstar IPO Allotment Date?
Sona BLW Precision Forgings IPO allotment date is 21 June 2021.

What is Sona Comstar IPO Listing Date?
Sona BLW Precision Forgings IPO listing on BSE and NSE as on 24 June 2021.

Shyam Metalics IPO Date, Review, Price, Form & Market Lot Details

Shyam Metalics IPO date is 14 June and closes on 16 June 2021. The Shyam Metalics IPO to raise Rs.909 Crores via IPO (Rs.657 Crores Fresh Issue + Rs.252 Crores OFS).

 

Shyam Metalics and Energy Limited aka Shyam Metalics IPO is open on 14th June 2021 to 16th June 2021 as per the RHP filed. The company is a leading producer of integrated metal. They focus on ferro alloys  and intermediate and long steel products such as iron pellets, sponge iron, steel billets, TMT, structural products and wire rods. They are based in Kolkata and incorporated in 2002. The company offers wide range of intermediate and final products as well. They have good clients list like Jindal Stainless Limited, BHEL, SAIL, JSW Steel and more. They have international clients as well. The retail portion of the IPO is 35% while QIB is 50% and NII is 15%. Shyam Metalics IPO to list on NSE and BSE both the indices. Stay tuned for Shyam Metalics IPO details.

Important Details:

Shyam Metalics is one of the largest producers of ferro alloys in terms of installed capacity in India, as of February 2021. As of 31 March 2020, it was one of the leading players in terms of pellet capacity and the fourth largest player in the sponge iron industry in terms of sponge iron capacity in India. They have a partnership with 42 distributors to offer its products across 13 states and 1 union territory in India. They have 3 manufacturing plants located in Sambalpur in Odisha, and Jamuria and Mangalpur in West Bengal.

Shyam Metalics IPO Review

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Shyam Metalics IPO Date & Price Band

        

IPO Open	14th June 2021
IPO Close	16th June 2021
IPO Size	Approx ₹909 Crores
Fresh Issue	Approx ₹657 Crores
Offer for Sale	Approx ₹252 Crores
Face Value	Rs.10 Per Equity Share
Price Band	Rs.303 to Rs.306 Per Share
Listing on	BSE & NSE
Retail Portion	35%
Employee Disc	Rs. 15 per share
Equity	- Shares

Shyam Metalics IPO Market Lot

 

Minimum Lot Size	Minimum - 45 Shares
Minimum Amount	Rs. 13,770/-
Maximum Lot Size	Maximum – 630 Shares
Maximum Amount	Rs.1,92,780/-

Shyam Metalics IPO Allotment & Listing

 

Basis of Allotment	21st June 2021
Refunds	22nd June 2021
Credit to Demat Account	23rd June 2021
Listing Date	24th June 2021

Shyam Metalics Company Audited Financial Report Summery

	Revenue	Expense	PAT	Ratio(%)
2018	Rs.3920.4	Rs.3405.5	Rs.521.9	13.31%
2019	Rs.4684.6	Rs.3920.7	Rs.641.8	13.70%
2020	Rs.4395.3	Rs.4099.9	Rs.340.8	7.75%
2021-9M	Rs.3995.6	Rs.3489.5	Rs.460.2	11.52%

Company Promoters

• Mahabir Prasad Agarwal, Brij Bhushan Agarwal, Sanjay Kumar Agarwal, Subham Capital Private Limited, Subham Buildwell Private Limited, Narantak Dealcomm Limited, Kalpataru Housefin & Trading Private Limited, Dorite Tracon Private Limited, Toplight Mercantiles Private Limited

About Shyam Metalics

They are a leading integrated metal producing company based in India with a focus on Long Steel Products and Ferro Alloys. They have a consistent track record of delivering operating profitability, and since the commencement of their operations in Fiscal 2005, They have delivered a positive EBITDA in each of the Fiscals.

As of March 31, 2020, They were one of the leading players in terms of pellet capacity and the fourth largest player in the Sponge Iron industry in terms of sponge iron industry capacity in India (Source: CRISIL Report). They operate three manufacturing plants, one in Odisha and two in Theyst Bengal. The aggregate installed metal capacity of their manufacturing plants is 5.71 as of December 31, 2020(comprising intermediate and final products). Their manufacturing plants also include captive poTheyr plants with an aggregated installed capacity of 227 MW as of December 31, 2020 their Sambalpur manufacturing plant caters to customers in Southern and Theystern regions of India whereas their Jamuria and Mangalpur manufacturing plants caters to customers in Northern and Eastern regions of India.

They operate two "Ore to metal" integrated (forward and backward) steel manufacturing plants, one in Sambalpur, Odisha and one in Jamuria, Theyst Bengal which comprise of captive railway sidings, captive poTheyr plants, iron pellet, sponge iron, billet, TMT, wire rod and structural mills and Ferro alloy plants. They also operate a manufacturing plant in Mangalpur, Theyst Bengal which comprises sponge iron and Ferro alloy plants and a captive poTheyr plant.

Their integrated manufacturing plants are fungible by design, which insulates us from price volatility and provides us with the ability to quickly adapt to changing market conditions and shift their production and product offerings to meet the continuously changing market climate and optimize their operating margins. Their manufacturing plants primarily produce long steel products such as iron pellets, sponge iron, steel billets, TMT and structural products, and Ftrro alloys with a specific focus on high margin products such as customized billets and specialized Ferro alloys for special steel applications.

Their TMT and structural products are sold under the brand "SEL". They also undertake conversion of hot rolled coils to pipes, chrome ore to ferro chrome and manganese ore to silico manganese for an Indian steel conglomerate. They are in the process of further diversifying their product portfolio by entering into the segments of pig iron, ductile iron pipes and aluminium foil.

They are in the process of adding fresh capacities to their manufacturing plants and captive poTheyr plants and diversifying into related segments. Post completion of these capacity expansions the aggregate installed metal capacity of their manufacturing plants and Their captive poTheyr plants shall increase from 5.71 MTPA as of December 31, 2020 to 11.60 MTPA (comprising of intermediate and final products) and 227 MW to 357MW respectively. their product offerings cater to a mix of customers which consist of institutional customers and end consumers through their distribution network.

Shyam Metalics IPO Registrar

KFintech Private Limited

Selenium Building, Tower-B, Plot No 31 & 32,

Financial District,Nanakramguda, Serilingampally,

Rangareddi, Telangana India - 500 032.

Phone: 1-800-3454001

Email: einward.ris@karvy.com

Website: https://karisma.kfintech.com/

Company Address

Shyam Metalics and Energy Limited

Trinity Tower, 7th Floor, 83,

Topsia Road, Kolkata – 700046, India

Phone: +91 33 4016 4000

Email: compliance@shyamgroup.com

Website: http://www.shyammetalics.com/

Shyam Metalics IPO FAQs

What is Shyam Metalics IPO?

Shyam Metalics IPO is a main-board IPO. They are going to raise Rs.909 Crores via IPO. The issue is priced at Rs. 303 to 306 per equity share. The IPO to be listed on BSE & NSE.

When Shyam Metalics IPO will open for retail?

The IPO is to open on 14th June 2021 for  Retail Investors and QIB, NII.

What is Shyam Metalics IPO Investors Quota?

The investors' quota for QIB-50%, NII-15%, and Retail 35%.

    

What is Shyam Metalics IPO Price Band?

Shyam Metalics IPO Price Band is Rs.303 to Rs.306.

What is Shyam Metalics IPO Minimum Lot Size?

The minimum apply is 45 Shares with Rs.13770. 

What is Shyam Metalics IPO Allotment Date?

Shyam Metalics IPO allotment date is 21st June 2021.

What is Shyam Metalics IPO Listing Date?

Shyam Metalics IPO listing on NSE and BSE as on 24th June 2021.

GST Amnesty Scheme & other relief to the GST Taxpayers at 43rd GST Council Meeting

• Late fee for non-furnishing of returns in FORM GSTR-3B for the tax periods from July, 2017 to April, 2021 has been reduced as under :

  Category of Taxpayers	Maximum amount of Late Fee
  Taxpayers having NIL tax liability during the respective tax period	Rs.500/- (Rs.250/- each for CGST & SGST) per return
  Other Taxpayers	Rs.1000/- (Rs. 500/- each for CGST & SGST) per return

  
  
  Reduced rate of late fee would apply if return in FORM GSTR-3B for these tax periods are furnished between 01.06.2021 to 31.08.2021. Relevant notification to implement the above recommendation is being issued.

  

  
  
• Rationalization of late fee leviable on account of delay in furnishing return in FORM GSTR-3B and FORM GSTR-1 for prospective tax period (June, 2021 onwards)

To reduce burden of late fee on taxpayers, the late fee is being capped, as follows:

Category of Taxpayers	Maximum amount of Late Fee
Taxpayers having nil tax liability/ nil outward supplies	Rs.500/- (Rs.250/- each for CGST & SGST) per return
Other Taxpayers:
For taxpayers having AATO in preceding FY upto Rs.1.5 crores	Rs.2000/- (Rs.1000/- each for CGST & SGST) per return
For taxpayers having AATO in preceding FY between Rs.1.5 crores to Rs. 5 crores	Rs.5000/- (Rs.2500/- each for CGST & SGST) per return
For taxpayers having AATO in preceding FY above Rs.5 crores	Rs.10,000/- ( Rs.5000/- each for CGST & SGST) per return

• Rationalization of late fee leviable on account of delay in furnishing return in FORM GSTR-4 by Composition taxpayers for prospective tax periods (FY 21-22 onwards)

  Category of Taxpayers	Maximum amount of Late Fee
  Taxpayers having NIL tax liability	Rs.500/- ( Rs.250/- each for CGST & SGST) per return
  Other Taxpayers	Rs.2000/- (Rs.1000/- each for CGST & SGST) per return



• Rationalization of late fee leviable on account of delay in furnishing return in FORM GSTR-7 by Tax Deductors at Source for prospective tax periods (June, 2021 onwards)

1. Late fee payable for delayed furnishing of return in FORM GSTR-7 to be reduced to Rs.50/- per day (Rs.25/- each for CGST & SGST) per return
2. Maximum amount of late fee is Rs.2000/- (Rs.1,000/- each for CGST & SGST) per return

• Compliance related relief for GST Taxpayers Amendment in Rule 36(4) of CGST Rules Relaxation in availment of Input Tax Credit (ITC)

105% cap on availment of ITC to be applicable on cumulative basis for tax periods April, May and June, 2021, to be applied in the return FORM GSTR–3B for the tax period June, 2021

• Compliance related relief for Taxpayers registered under Companies Act

Taxpayers registered under the Companies Act to be permitted to furnish GST returns by using Electronic Verification Code (EVC) instead of Digital Signature Certificate (DSC) till 31.08.2021

• Compliance related relief for taxpayers who are not under QRMP Scheme

Due date for furnishing details of outward supplies in FORM GSTR-1 for the month of May 2021 to be extended by 15 days. The revised due date is as under :

GST Return	Month	Due date	Extended Due Date
FORM GSTR-1	May 2021	11.06.2021	26.06.2021

• Compliance related relief for taxpayers who are under QRMP Scheme

Last date for uploading B2B invoices for the month of May, 2021 through Invoice Furnishing Facility (IFF) to be extended by 15 days. The revised last date is as under:

GST Form	Month	Last date	Extended Last Date
FORM IFF	May 2021	13.06.2021	28.06.2021

• Compliance related relief for Composition Taxpayers

Due date for furnishing Annual return in FORM GSTR-4 for the FY 2020-21 to be extended to 31.07.2021

Now Due Date for GSTR-4, for FY 2020-21 is 31.07.2021

• Compliance related relief for GST Taxpayers

Now Due Date for ITC-04, for QE March, 2021 is 30.06.2021

Due date for furnishing FORM ITC-04 (intimation of goods sent on job work) for the Quarter ending March, 2021 to be extended to 30.06.2021

Taxation Aspects of Transfer of Property between Firms and Partners

Background

Prior to substitution by Finance Act, 2021, as per Section 45(4) of the Income Tax Act,1961, profit or gains arising on transfer of capital asset on the dissolution of a firm or other association of persons or body of individuals or otherwise, was chargeable to tax as the income of the firm, association of persons or body of individuals, of the previous year in which the said transfer took place. 

Further, the fair market value of the asset on the date of such transfer shall be deemed to be the full value of the consideration received or accruing for the purpose of Section 48.

However, there has been a long drawn dispute on taxation of capital gain under section 45(4) and it involved lot of controversies and some of them are listed below

1.  Whether the expression “Dissolution of the firm/AOP/BOI or otherwise” as mentioned in Section 45(4) includes reconstitution also?
2. Whether the provisions would be applicable in case where assets are revalued or self-generated assets are recorded in the books and payment made to partner is in excess of capital contribution
3. Whether money paid to partner would be taxable in the hands of the firm under section 45(4)?

All these issues have been addressed by Finance Act, 2021 with the insertion of Section 9B and 48(iii) and substituting Section 45(4) w.e.f. Assessment Year 2021-22.

Impact of the Amendments made by the Finance Act 2021, Section-wise 

Important terms for the purpose of the Section 45(4)/9B of the Income Tax Act :

1. Specified entity means a firm or other association of persons or body of individuals (not being a company or a co-operative society). 
2. Specified person means aperson, who is a partner of a firm or member of other association of persons orbody of individuals (not being a company or a cooperative society) in any previous year.’
3. “Reconstitution of the specified entity” means, where 

• one or more of its partners or members, as the case may be, of such specified entityceases to be partners or members; or
•  one or more new partners or members, as the case may be, are admitted in such specified entity in such circumstances that one or more of the persons who were partners or members, as the case may be, of the specified entity, before the change, continue as partner or partners or  member or members after the change; or
• all the partners or members, as the case may be, of such specified entity continue with a change in their respective share or in the shares of some of them;

Section 9B- Income on receipt of capital asset or stock in trade by specified person from specified entity

At the time of Reconstitution or dissolution of specified entity-

•  If a specified person receives any capital asset or stock in trade or both, 
• then there shall be deemed transfer of capital asset or stock in trade or both in hands of the specified entity in the year in which such capital asset or stock in trade are received by specified person and  
• Fair Market value of the capital asset or stock in trade shall be deemed to be the full value of the consideration received or accrued and
•   shall be taxable under head “Capital Gain” or “Profits and Gains of Business and profession” in accordance with the provisions of the Act.

Computation of Gain arising from deemed transfer of stock in-trade under section 9B read with Section 28 shall be as follows 

Fair Market value of stock transferred shall be recorded as sale and forms part of the business profit within the provisions of Section 28 of the specified entity.

Computation of Capital Gain arising on deemed transfer of capital asset under section 9B read with Section 48 shall be as follows:

Fair Market value of capital asset as Full value of consideration received or accrued as a result of the transfer of the capital asset	--
Less: Indexed Cost / Cost of acquisition of the asset	--
Less: Indexed Cost / Cost of Improvement of the asset	--
Income taxable under head capital gain	--

 

It is pertinent to note that mere reconstitution or dissolution of specified entity would not require application of provision of Section 9B. The provision becomes applicable when a specified person receives any capital asset or stock-in-trade at a time of reconstitution or dissolution of the specified entity. However, deemed taxability shall arise in the hands of the specified entity only.

Section 45(4)- Capital Gain on receipt of Money or Capital Asset by Specified Person in the hands of the Specified Entity

At the time of Reconstitution of specified entity,

•  where a specified person receives any money or capital asset or both;
•  then any profit and gains arising from such receipt of money or capital asset by specified person shall be deemed to be the income of the specified entity under the head “Capital Gains”;
• in the previous year in which such capital asset or money or both were received by the specified person and  
• such profit or gains shall be calculated in accordance with the following formula

A = B+C-D

Where,

A = income chargeable to income-tax under the head “Capital gains”;

B = value of any money received by the specified person from the specified entity on the date of such receipt;

C = the amount of fair market value of the capital asset received by the specified person from the specified entity on the date of such receipt; and

D = the amount of balance in the capital account of the specified person in the books of account of the specified entity at the time of its reconstitution without considering increase in the capital account of the specified person due to revaluation of any asset or due to self generated goodwill or any other self-generated asset (if any).

Where the value of A is negative, it shall be deemed to be nil.

For the purpose of this subsection

“Self-generated Goodwill” or “self-generated asset” means goodwill or asset which has been acquired without incurring any cost for purchase or which has been generated during the course of the business or profession.

Explanation- It has been clarified that when a capital asset is received by a specified person from the specified entity in connection with the reconstitution of specified entity, the provisions of this sub-section, i.e., 45(4) shall operate in addition to the provisions of Section 9B and the taxation under the said provisions thereof shall be worked out, independently.

Note- Section 45(4) comes only into the light at the time of reconstitution of a specified entity. It provides for taxability of profit and gains on receipt of capital asset or money in the hands of specified entity which is actually the income of specified person. Further, section 45(4) shall operate in addition to the provisions of Section 9B i.e. At the time of reconstitution, suppose if a specified entity transfers capital asset to its specified person then the same shall be taxable under section 9B as well as 45(4).

Section 48(iii)- Mode of computation of Capital Gain Section 48 provides for the deduction at the time of calculating capital gain from the full value of consideration received as a result of transfer of capital asset. A new clause (iii) has been inserted vide Finance Act 2021 which provides for an additional deduction in respect of capital gain taxed under section 45(4), i.e., deduction shall be allowed in respect of amount chargeable to tax under section 45(4) from the full value of the consideration of the capital asset at the time of transfer, calculated in the prescribed manner. However, the method for the same is yet to be prescribed by CBDT.

Computation of Capital Gain as per amended Section 48 shall be as follows

Full value of consideration received or accrued as a result of the transfer of the capital asset	--
Less: Indexed Cost / Cost of acquisition of the asset	--
Less: Indexed Cost / Cost of Improvement of the asset	--
Less: Amount chargeable to tax under section 45(4) in the hands of specified entity which is attributable to capital asset being transferred	--
Income taxable under head capital gain	--

 

Note- It is important to note that additional deduction shall arise only in case of reconstitution as section 45(4) cover only the reconstitution aspect and to mitigate the impact of double taxation [i.e. taxability under section 9B and 45(4)], clause (iii) has been inserted.

Comparative Analysis of Section 45(4), 9B and 45(iii) of the Income Tax Act, 1961

• Section 45(4) provides for taxability in the event of Reconstitution of specified entity whereas Section 9B provides for taxability in the event of reconstitution or dissolution of specified entity.
• For example- At the time of Reconstitution of the firm, if a partner gets capital asset and stock in trade from the firm, there are two transactions involved. First one is relinquishment of his rights as a partner and second is transfer of money or asset by the firm.
• Former transaction is dealt under the provisions of Section 45(4) and the latter in section 9B. However, in the former transaction income arises in the hands of the partner but as per section 45(4) it is deemed as income of the firm.
• Thus, the firm would be assessed under section 9B for its own income and under section 45(4) for the income arising to the partner.

Further, in case of reconstitution of firm double taxability will arise once under section 9B and second under section 45(4). To remove the impact of such double taxation, clause (iii) has been inserted to the section 48 which provides for the deduction of the amount attributable to tax under section 45(4) from the full value of consideration received or accrued at the time of transfer of capital asset.

Conclusion

Though the Finance Act, 2021 addressed several debated issues, few clarifications are further required from CBDT with respect to period of holding for capital asset classification for the purpose of Section 9B & 45(4), method of attribution under section48(iii), availability of deduction by virtue of Section 48(iii), bifurcation of amount attributable towards receipt of money and capital asset etc.

Further, the changes have been made applicable from the Assessment Year 2021-22, wherein if partner(s) or member(s) of the firms/AOP/BOI, reconstituted or dissolved during the concerned year received any capital asset, stock and/or money, then the firm/AOP/BOI are required to evaluate the implications of the said amendment.

Key Provision Amendment of Taxation in Finance Bill 2021

Tax payers can take a sigh of relief as no changes / increase has been proposed in the tax rates in spite of the need to have more funds in the challenging times.

Relief to certain category of senior citizens from return filing requirement

 In order to provide relief to resident senior citizens (aged of 75 year or above) having only pension and interest income accruing to them, an exemption has been proposed from filing the return of income. However, a declaration will have to be filed with specified bank in this regard and bank would be required to compute the income after giving effect to applicable deductions/ rebates and deduct income tax at rates in force.

Liable to tax defined - Section 2(29A)

It is proposed to insert a new clause (29A) to section 2 so as to define the expression “liable to tax”, in relation to a person, which means that there is a liability of tax on such person under any law for the time being in force in any country, and shall include a case where subsequent to imposition of tax liability, an exemption has been provided.

The amendment is in line with judicial pronouncements wherein it has been held that liable to tax does not necessarily imply that taxes are paid in the other contracting state, it is sufficient that contracting state has right to levy taxes. The concept is also relevant to determine if an individual is deemed to be resident under section 6.

Section 10(5)

Considering outbreak of Covid, 19 and travelling possibilities being hindered, Section 10(5) is proposed to be amended to provide tax exemption of cash allowance in the hands of individuals, if any value or assistance is received by or due to such individual in lieu of any travel concession subject to fulfilment of conditions as may be prescribed.

Proposed amendment to be made effective from AY 2021-22 

Section 10(11) and 10(12) 

Payment from provident fund is exempt under Section 10(11) and receipt of accumulated balances from employee recognised provident fund is exempt under section 10(12). It is proposed to provide that such exemption shall not apply to interest income accrued to the extent it relates to the amount or aggregate of the amounts of contribution to such funds made on or after 01st April 2021 in excess of Rs. 2.5 lakhs in the previous year. This amendment would affect taxpayers contributing huge sum to these funds as exemption would be denied to the extent of interest income on the excess sum contributed.

Relief with respect to income from overseas retirement funds

New section 89A is proposed to be inserted to address mismatch in taxation of income from specified overseas retirement accounts maintained by specified person in a notified country. Specified person is a person resident in India who has opened a retirement benefit account in a notified country while being a non-resident in India and a resident in that country. Said income shall be taxed in such manner and in such year as may be prescribed.

It is proposed to shift the taxation of such retirement benefit from accrual basis to receipt basis in India. The aforesaid relief will mainly benefit the NRIs returning to India.

Proceeds from Unit Linked Insurance Plan (Ulip) Section 10(10D)

Any proceeds received under ULIP issued on or after 01st February 2021 shall not be eligible for exemption if annual premium exceeds Rs. 2.5 Lakhs.

Such ULIP shall be treated as capital asset (equity oriented unit) and proceeds shall be taxable as capital gains. Rules for computation of capital gains shall be prescribed.

This amendment intends to put a cap on the total premium paid under ULIPs majority affecting High Net Worth Individuals.

Amendment to section 36(1)(va) and 43B

There have been numerous judicial pronouncements in favour and against taxpayer, on the issue whether contribution toward employee’s provident fund made by an employer after the due date prescribed under labour welfare laws but before the due date of the filing return of income shall be allowed as deduction or not? To address this, it is proposed to insert explanation in section 36(1)(va) and section 43B to clarify that provisions of 43B shall not apply to employees contribution to welfare funds accordingly, deduction shall be allowed under section 36 only if the deposit is made within the due dates prescribed under the relevant labour laws. This will now ensure stricter compliance adherence in the hands of taxpayers.

Depreciation on Goodwill

1. The long-drawn dispute of whether depreciation can be claimed on goodwill for the purpose of business and profession has been put to rest by the amendments proposed, by specifically carving out goodwill on business and profession as a depreciable asset for income tax purposes.
2.  It is further proposed to prescribe a specific computation mechanism to determine the written down value and short-term capital gains in case where depreciation on goodwill has already been claimed by the assessee.

This amendment clamps down on depreciation on goodwill which was being claimed by the corporate taxpayers all along relying on the Apex court judgement. It would impact depreciation even on concluded transactions.

Increase in the safe harbour limit under section 43CA and 56

It is proposed to increase the safe harbour limit under section 43CA from 10% to 20% in case of transfer of residential unit subject to following conditions :

• Transfer takes place between 12th November 2020 to 30th June 2021
• Transfer is by way of first time allotment to any person
• Consideration does not exceed Rs. 2 crore

Consequential relief is proposed to be provided under section 56(2)(x) for buyer of the property by increasing the safe harbour from 10 % to 20%.

These amendments would benefit real estate developers and give fillip to real estate sector.

Increase in the threshold for tax audit under section 44AB

It is proposed to increase the threshold limit for tax audit to 10 crores from existing 5 crores to incentivise digital transaction and reduce compliance burden, provided that (i) aggregate amount received for sales/turnover in cash and (ii) aggregate payment (expenditure) in cash does not exceed 5% of said respective amounts. Amendment is effective from AY 2021-22.

Section 44ADA – Presumptive taxation for professionals –

Provisions of presumptive taxation is not applicable to LLP since LLPs are required to maintain books of accounts under LLP Act and benefit of non maintenance of books of accounts under 44ADA cannot be availed. It is proposed to explicitly mention non applicability of section 44ADA to LLPs.

Expanding the scope of slump sale

It is proposed to expand the scope of ‘slump sale’ to include transfer of “undertaking, by any means,” thereby including all types of transfers within the ambit of ‘slump sale’. It is pertinent to note that this amendment would overturn the Bombay High Court judgement in the case of Bharat Bijlee wherein taxability of slump exchange was denied in absence of monetary consideration (in this case consideration was in nature of shares). In substance, transfer in the form of exchange shall also be covered under slump sale (provided other conditions are satisfied).

Section 142

It is proposed to empower prescribed income tax authority to issues notices under section 142 (1) besides assessing officer. This is in line with policy on faceless assessment to enable centralised issuance of notices. 

Revamping of reassessment proceedings

Unlike the erstwhile reassessment provisions where emphasis was on “reasons to believe” , substituted provisions focus on “information with the Assessing officer” i.e., information flagged in accordance with the risk management strategy formulated by the Board from time to time (or) any objection raised by C&AG. It may be noted that considering ‘flagged information based on risk management strategy’ as an ‘information’ so as to warrant assumption of jurisdiction under section 147/148 in all cases shall tantamount to giving unfettered powers to the assessing authorities for reopening assessment.

Section 148A has been inserted to provide that before issuance of notice under Section 148, the Assessing Officer shall conduct enquiries, if required, and provide an opportunity of being heard to the assessee. After considering reply, the Assessing Officer shall decide, by passing an order, whether it is a fit case for issue of notice under Section 148. Giving opportunity of being heard before initiating reassessment proceedings is a welcome step.

Further, it is proposed to subsume provisions of section 153A/153C of the block assessments in the newly substituted section 148.

Faceless ITAT

With an aim to reduce human interface and cost of compliance it is proposed to introduce faceless proceedings before the ITAT. While creating a faceless ITAT is pathbreaking being one more step towards digitisation,its implementation and practical challenges should be closely examined.

MAT provisions :

115JB is proposed to be amended to provide that dividend income earned by foreign companies shall be reduced from the book profit and related expenditure added back where such income is taxed at lower that MAT rate due to DTAA 

Further, where past year income is included in books of accounts, on account of Advance Pricing Agreement or secondary adjustment, Assessing Officer shall on application made to him recompute the book profits of past years.

Section 10(50)

Equalisation Levy was introduced by India in 2016, on the lines of the recommendations of the OECD BEPS Action Plan aiming to tax revenues generated by ecommerce supply or services made which would not fall under the tax net applying the conventional tax norms.

E-commerce supply or services is defined to mean “online sale of goods” and “online provision of services”. Definition of term “online sale of goods” and “online provision of services” is now expended to include one or more of the following activities taking place online:

(a) Acceptance of offer for sale;

(b) Placing the purchase order;

(c) Acceptance of the Purchase order;

(d) Payment of consideration; or

(e) Supply of goods or provision of services, partly or wholly

Further, it is clarified that Equalisation levy is applicable on e-commerce supply or services irrespective of whether the e-commerce operator owns the goods or provides /facilitates the services.

Income from any specified service on which equalisation levy is applicable shall be exempt as per section 10(50).

Explanation 1 is proposed to be inserted to clarify that the income referred to in this clause shall not include and shall be deemed to have never included income which is chargeable to tax as royalty or Fee for technical service in India under the Income tax Act or DTAA.

Miscellaneous Provision

1. It is proposed to widen the ambit of provisional attachment u/s. 281B during pendency of any proceeding for imposition of penalty under section 271AAD (penalty for false entry or omission of entry in books of accounts) where the amount or aggregate amount of penalty likely to be imposed exceeds Rs. 2 Crores.
2. It is proposed to enable infrastructure debt fund to issue zero coupon bond under section 10(48). Further, TDS under section 194A shall not be applicable on paid or payable by infrastructure debt fund
3. To settle long pending disputes and to reduce litigation, dispute resolution is proposed for small taxpayers through constitution of a Dispute Resolution Committee. Taxpayers with taxable income up to ` 50 lakh and disputed income up to Rs. 10 lakh shall be eligible to approach the Committee.
4. Section 44DB is proposed to be amended to extend the benefit of various deductions to a case where a primary co-operative bank is converted to a banking company. Section 47 is also proposed to be amended to include transfer of capital asset by a primary co-operative bank to a banking company within its scope. Accordingly, such transaction shall not be treated as a transfer.
5. Section 72A is proposed to be amended with a view to facilitate strategic divestment by the Government to enable set off and carry forward of loss and allowance of depreciation of amalgamating company to amalgamated company in case of amalgamation of one or more public sector company/companies with another public sector company/companies.
6. 6. No interest under section 234C is proposed to be charged on shortfall in payment of advance tax on dividend income (except deemed dividend) provided full tax thereon is paid in subsequent instalments 
7. Section 115AD is proposed to be made applicable to investment division of an offshore banking unit to the extend income is attributable to investment division as Category III portfolio investor under SEBI (FPI) Regulations, 2019
8. Income tax Settlement Commission is abolished with effect from 1 February 2021.

Conclusion

In this unprecedented time government is walking tightrope aiming to revive the economy with various benefits, tax incentives and measures as announced in this budget.

The Finance Minister rightly remarked in her speech “‘Faith is the bird that feels the light and sings when the dawn is still dark’’. With these measures, the economy will certainly come out of present problems to reflect its true potential sooner than later.