Section 16 of The Airports Authority of India Act, 1994
- (1)Where any exemption from, or any assessment with respect to, any tax has been granted or made or any benefit by way of set off or carry forward, as the case may be, of any unabsorbed depreciation or investment allowance or other allowance or loss has been extended or is available to the International Airports Authority or the National Airports Authority, under the Income-tax Act, 1961 (43 of 1961), such exemption, assessment or benefit shall continue to have effect in relation to the Authority in which the undertakings of the International Airports Authority and the National Airports Authority have vested by virtue of this Act.
- (2)Where any payment made by the International Airports Authority or the National Airports Authority is exempt from deduction of the tax at source under any provision of the Income-tax Act, 1961 (43 of 1961), the exemption from tax will continue to be available as if the provisions of the said Act made applicable to the International Airports Authority or the National Airports Authority were operative in relation to the Authority in which the undertakings of the International Airports Authority and the National Airports Authority have vested by virtue of this Act.
- (3)The transfer and vesting of the undertakings or any part thereof in terms of section 13 shall not be construed as a transfer within the meaning of the Income-tax Act, 1961 (43 of 1961) for the purposes of capital gains.
Summary
- The new Authority gets to keep all the income tax benefits, exemptions, and loss carry-forwards that belonged to the old authorities.
- Moving all the assets from the old authorities to the new one is not considered a transfer for capital gains tax, so no massive tax bill is triggered.
- If the old authorities were exempt from having tax deducted at source (TDS) on payments made to them, the new Authority gets that same exemption.
Practical examples
FAQ
1. Does the massive transfer of airport properties mean the government has to pay capital gains tax?
No, the law says this specific merger does not count as a transfer for capital gains tax purposes.
2. Under what law do these tax benefits apply?
They apply under the Income-tax Act, 1961.
3. Can the new Authority use the old authority's past financial losses to reduce its current tax bill?
Yes, benefits like carrying forward an allowance or loss continue for the new Authority.
Test yourself
Q1.Under Section 16 of The Airports Authority of India Act, 1994, how is the vesting of undertakings described in Section 13 treated regarding capital gains?
Q2.Under Section 16 of The Airports Authority of India Act, 1994, what happens if the National Airports Authority had a benefit of carrying forward an unabsorbed depreciation?
Q3.Under Section 16 of The Airports Authority of India Act, 1994, which specific tax statute governs the exemptions and carry forwards mentioned?
Q4.Under Section 16 of The Airports Authority of India Act, 1994, what continues to be available if a payment made by the old authorities was exempt from deduction of tax at source?