Ordinance likely for A-I, IA merger

The government is likely to introduce legislation or an ordinance to speed up the merger of state-owned carriers Indian Airlines and Air-India.

The proposed law would be to amend section 72A of the Income-Tax Act to allow the merged entity to carry forward the unabsorbed depreciation of the two airlines and set off previous years’ losses against the profits of the new entity.

According to sources, the merged airline will face an additional tax liability of Rs 256 crore in terms of unabsorbed depreciation and losses not carried forward. The unabsorbed depreciation is about Rs 740 crore in the case of Indian Airlines, while Air-India’s balance sheet has unabsorbed depreciation of Rs 20 crore.

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