Conflict Between Insolvency Law and Tax Regulations Impacts Loss Carry-Forward for Companies
IBC-tax law mismatch clouds loss carry-forward benefits: Experts
Business Standard
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A mismatch between India's Insolvency and Bankruptcy Code (IBC) and tax laws is creating uncertainty for companies in resolution. Experts note that tax authorities are denying the carry-forward of past losses even after approval from the National Company Law Tribunal (NCLT), complicating financial recovery.
- 01Conflict between IBC and tax laws affects loss carry-forward benefits.
- 02Tax authorities are increasingly denying carry-forward of past losses.
- 03Resolution plans approved by NCLT do not guarantee tax benefits.
- 04This situation creates uncertainty for financially stressed companies.
- 05Experts are calling for clarity in the legal framework.
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Experts are raising concerns about a growing conflict between India's Insolvency and Bankruptcy Code (IBC) and tax regulations, which is impacting the ability of financially distressed companies to carry forward past losses. Under the IBC, companies can be taken over by new owners through a resolution process, but tax authorities are increasingly denying the benefit of loss carry-forward even after resolution plans receive approval from the National Company Law Tribunal (NCLT). This mismatch creates significant uncertainty for companies undergoing resolution, complicating their financial recovery and ability to leverage past losses for tax purposes. Experts are urging for clearer guidelines to reconcile these conflicting legal frameworks to support companies in distress.
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This legal conflict may hinder the financial recovery of companies in distress, affecting their ability to utilize past losses for tax benefits.
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