Saturday, June 16, 2012

PEs & VCs Eye Exit via Offer For Sale after STT Ruling

Private equity (PE) and venture capital (VC) players are exploring options to exit their investments through the offer for sale (OFS) route, following the recent changes in tax rules governing such sales.
The amendments to the Finance Bill, brought offer for sale transactions under the Securities Transaction Tax (STT) net. The seller in these offers is liable to pay Securities Transaction Tax
(STT) of 0.2 per cent, beginning July 1. This means such transactions would be exempt from the capital gains tax of 10 per cent, which these funds were otherwise liable to pay. Senior officials said several players are looking at this as a viable option and have even approached the newly-formed Small and Medium Enterprises (SME) exchanges to understand the finer details for listing.


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