Revenue Deptt to look deeper into Jet-Etihad deal

The Revenue Department is looking deeper into the proposed Rs 2,058 crore Jet-Etihad deal to identify the beneficial owners and check whether it is structured in a way to evade taxes.

'Revenue department is looking into the clause of beneficial ownership of the Jet-Etihad deal. The Department will have to see the tax implications of the deal whether it is meant to evade tax,' a finance ministry official told PTI.

The Finance Ministry has already sought more clarity on the clauses concerning effective control of the new company and has written to market regulator Sebi for a report on its ownership structure.

'As per the shareholder agreement and governance agreement submitted by Jet, the final ownership goes into the foreign hands,' the official claimed.

The Foreign Investment Promotion Board (FIPB) had last month deferred a decision on the deal, which is the largest foreign investment proposal in the Indian aviation sector, and sought clarity on control and ownership.

'The FIPB has sought a revised structure from Jet wherein it has to make it clear that post-deal the company will be controlled by an Indian governed by Indian law,' the official added.

Sources said the FDI holding, including the NRI investment by Jet Chairman Naresh Goyal, would be 88.57 per cent.

'We have to see how Jet gives the revised deal structure. How they present the ownership of Naresh Goyal,' the official said.

The FIPB has also sought clarity from Department of Industrial Policy and Promotion (DIPP) on FDI policy in aviation and whether the 49 per cent FDI sectoral cap in civil aviation includes NRI investment.

The Prime Minister's Office (PMO) on July 2 came out with a statement rebutting allegations on the deal raised by senior BJP leader Jaswant Singh, CPI's Gurudas Dasgupta, Dinesh Trivedi (Trinamool Congress) and Janata Party chief Subramanian Swamy, each of whom had shot off separate letters to Prime Minister Manmohan Singh.