The Large Taxpayer Office has reported the successful collection of Rs. 12.5 Arba in profit tax, derived from mergers, gains from acquisitions, and profits generated from Follow-On Public Offerings (FPOs). This significant amount was gathered on Friday and Saturday through detailed filings by numerous organizations. On Friday, 30 organizations contributed to this sum, filing taxes amounting to Rs. 11.3 Arba, with an additional 11 institutions filing taxes on Saturday, totaling Rs. 1.44 Arba. Mr. Janak Sharma, the head of the Large Taxpayer Office, commended both public and private entities for their proactive engagement in meeting their tax obligations.
It was disclosed that among the 41 organizations paying taxes on profits from FPO, 14 also paid taxes on profits from both FPO and bargain purchases resulting from mergers and acquisitions. This tax collection falls under the current financial year, representing a substantial boost in revenue.
This initiative was prompted by persistent recommendations from the Office of the Auditor General, raising concerns about tax evasion related to FPO premiums, gains from bargain purchases in mergers and acquisitions, and auction share sales. The Ministry of Finance and the Inland Revenue Department initially overlooked these concerns but took action following the 60th report of the Office, emphasizing the recovery of revenues from these sources.
In response, Finance Minister Dr. Prakash Sharan Mahat introduced an arrangement to encourage timely payment of revenues. Companies paying taxes on FPO premiums, bargain purchase gains, and auction share sales by the end of Mangsir would be exempted from fines and interests. Despite legal scrutiny, the constitutional bench of the Supreme Court recently dismissed a petition filed by 16 Banking and Financial Institutions (BFIs), upholding the government’s position that the taxation did not constitute a levy on capital.
The BFIs were given a deadline to deposit the specified amount by the end of Mangsir, and companies proactively met this deadline, contributing significantly to the substantial revenue collection observed over the weekend. The detailed breakdown of tax payments by various BFIs under different titles is provided, with a total of Rs. 7 Arba 97 Crores 87 lakhs remitted under FPO and Rs. 4 Arba 49 Crores 81 Lakhs for benefit of Bargain Purchases.