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Govt likely to get tax bonanza under Mistry exit plan, say experts

A legal source said the Mistrys would have to sell shares in listed Tata companies to pay the tax (if Tata Group agrees to the Mistry plan) and lower their stakes in them

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Tata Sons had free reserves of Rs 45,545 crore as of March this year and the Mistrys have valued their 18.4-per cent stake at Rs 1.78 trillion

Shapoorji Pallonji (SP) Group will have to pay hefty tax to the government under its latest proposal for an exit from Tata Sons.  Tax experts said under the current provisions of tax laws applicable to capital reduction, the recipient (SP Group) would be chargeable to deemed dividend (to the extent of the distributing company’s free reserves) and in relation to the fair value of assets over and above such free reserves, there would be capital gains tax to be paid to the government. Tata Sons had free reserves of Rs 45,545 crore as of March this year and the Mistrys ...