Bidders for stressed assets face income tax hurdle

JSW Steel has emerged as the biggest potential acquirer of stressed assets

The sale of stressed assets by lenders could face a serious problem if the income tax (I-T) department demands a levy on the haircut and interest foregone by them on these assets once a new owner takes over. 

Bidders, private equity companies, and lawyers said while the erstwhile Sick Industrial Companies Act (SICA) had exempted the I-T for sick companies, those under the Insolvency and Bankruptcy Code (IBC) were not getting any tax breaks. This could lead to a lower valuation of these assets by potential bidders.

Citing an example, a bidder said if a stressed company had an outstanding