Jet may issue fresh shares to Etihad in stake sale
On the other hand, a sale of stake to Etihad by Tail Winds Ltd, the Isle of Man registered promoter entity that currently owns over 79 per cent stake in in Jet Airways, will attract capital gains tax. The nature of the liability will be similar to the Vodafone-Hutch Essar deal and is taxable as per current Indian laws. If the government accepts the Parthasarathi Shome committee report on the subject, which has suggested that such transfer of shares should be tax free before the deal comes through, the tax implication will be solved.
Senior officers from both the airlines met finance minister P Chidambaram on Friday about the deal but none of them coming out of the meeting offered any comments.
According to a source familiar with the deal, issuing of fresh shares will expand the equity base of Jet Airways and dilute the current holdings in the airline. A subsequent open offer can further reduce the stake of promoter entities such as Tail Winds, but as it would be conducted through an exchange, will not attract any long term capital gains tax. However, this will not address the concerns of foreign holdings in the company
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