Budget 2025: Will Budget introduce measures to streamline tax structures to smoothen merger and acquisition deals

With Finance Minister Nirmala Sitharaman all set to table the Union Budget 2025 on February 1, Deloitte expects the government to streamline tax structures and improve the overall ease of doing business in terms of mergers and acquisitions. During the first nine months of 2024, the total value deals in India surged by 66 per cent compared with the same period in 2023 and these were driven by high-value transactions. “Businesses across various sectors in India intend to further use cross-border M&A to strengthen their international presence, acquire new technologies and consolidate resources,” said Vivek Gupta, Partner, Deloitte, while adding that measures that will streamline tax structures will help going forward. 

The industry stakeholders and even the tax experts are expecting the government to unveil amendments aimed at rationalising various provisions, fostering economic growth, and promoting investor confidence.

Also ReadBudget 2025: Strengthening of NCLT tops MCA’s wish list

Deloitte, meanwhile, pointed out three expectations from the upcoming Budget and these include taxation on contingent consideration, applicability of Section 56(2)(x) on listed company trades, and exemptions for enabling carry forward of business losses in case of internal group structuring.

Here is a list of expectations from Union Budget 2025-26, as outlined by Deloitte:

Expectation 1

While making investments in India, most investors plan to introduce a combination of clauses in the shareholder’s agreement, including contingent consideration based on certain performance milestones. In essence, Deloitte said, such clauses incentivise promoters to achieve better performance after the deal. There is no clarity on whether such contingent considerations should be taxed in the year of transfer of shares or in the year of receipt after the consideration crystallises. “It may be clarified by an explanation or clarificatory provision that the contingent portion should be taxable as capital gains in the year it is crystallised, irrespective of the year the transfer of share takes place. The introduction of a mechanism to defer taxation until the contingency is realised would improve tax certainty for both parties involved in the transaction,” Vivek Gupta said.

Expectation 2

Section 56(2)(x) of the Income Tax Act, 1961 serves a critical role in preventing tax avoidance through undervalued asset transfers. Still, its interpretation in the case of the trade of shares of listed companies in an off-the-exchange transaction could lead to unintended tax liabilities.

 » Read More

Related Articles

Markets to track inflation data, global trends, FIIs trading activity this week: Analysts

Investors would track a host of macroeconomic data announcements scheduled this week, including inflation numbers, and also monitor global market trends, and trading activity of foreign institutional investors, analysts said. The ongoing quarterly earnings announcements and the rupee-dollar trend would also influence the markets. “This week is set to be dynamic for global and Indian

The Evolution of Gurgaon’s Real Estate: How Dwarka Expressway is leading the way

With rising demand and consistent price appreciation, Gurgaon’s real estate market is on a strong growth trajectory. Its prime location, excellent connectivity, and world-class infrastructure make it a preferred choice for homebuyers and investors alike. The Evolution of Gurgaon Real Estate Infrastructure Gurgaon has long been a pioneer in shaping India’s luxury real estate market

Fixed Deposit: Make the most of current FD rates before they start falling

Fixed deposit (FD) rates are currently looking pretty attractive. If you’ve been thinking about parking your savings in guaranteed return investment schemes and earn decent returns, this might be the best time to do so. Banks are currently offering interest rates as high as 8% on FDs, with smaller banks pushing the envelope even further.

LEAVE A REPLY

Please enter your comment!
Please enter your name here

Stay Connected

0FansLike
0FollowersFollow
0SubscribersSubscribe
- Advertisement -

Latest Articles

Markets to track inflation data, global trends, FIIs trading activity this week: Analysts

Investors would track a host of macroeconomic data announcements scheduled this week, including inflation numbers, and also monitor global market trends, and trading activity of foreign institutional investors, analysts said. The ongoing quarterly earnings announcements and the rupee-dollar trend would also influence the markets. “This week is set to be dynamic for global and Indian

The Evolution of Gurgaon’s Real Estate: How Dwarka Expressway is leading the way

With rising demand and consistent price appreciation, Gurgaon’s real estate market is on a strong growth trajectory. Its prime location, excellent connectivity, and world-class infrastructure make it a preferred choice for homebuyers and investors alike. The Evolution of Gurgaon Real Estate Infrastructure Gurgaon has long been a pioneer in shaping India’s luxury real estate market

Fixed Deposit: Make the most of current FD rates before they start falling

Fixed deposit (FD) rates are currently looking pretty attractive. If you’ve been thinking about parking your savings in guaranteed return investment schemes and earn decent returns, this might be the best time to do so. Banks are currently offering interest rates as high as 8% on FDs, with smaller banks pushing the envelope even further.

FPIs’ incessant selling continues; withdraw Rs 7,300 crore from equities in a week

The exodus of FPIs from the Indian equity markets continued unabated, as they withdrew over Rs 7,300 crore (about 840 million) in the first week of this month due to global trade tensions, with the US imposing tariffs on countries such as Canada, Mexico, and China. This came following an outflow of Rs 78,027 crore

Co-working spaces boom in small towns

In December last year, Andhra Pradesh chief minister N Chandrababu Naidu, in a bid to boost employment opportunities for women, ordered state officials to facilitate development of co-working spaces and “neighbourhood working spaces”. By the end of 2025, Andhra Pradesh aims to set up 1,50,000 seats in co-working space centres in government and private buildings.