RIL Chief in tax saving mission, find out how
pankaj kumar | August 25, 2010 at 10:05 pmby
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Known for their swift action to create wealth maximization opportunity Mukesh Ambani has restructure their holding in their company through various holding company.
Richest man of India MukeshAmbani has commenced a major workout to restructure his shareholding in flagship company Reliance Industries to make it more tax efficient.
According to the data available on the stock exchange websites, Mukesh Ambani held 44.7% stake via 41 privately held companies as of March 31, 2010. Some of the holding companies held as high as 9.6% stake while others held just few hundred shares. And, at the end of June 30, 2010 he held the same stake under 71 privately-held companies.
As part of the rearrangement, Ambani has moved 34.17% stake held in 32 privately-held companies to 61 companies which include 27 limited liability partnerships (LLPs). Mukesh Ambani has taken the advantage of LLP act to save the tax.
As per the NSE data, Reliance's promoter formed 27 additional LLPs as promoter-owned company in the April to June 2010 quarter. The stake restructuring was undertaken on August 11, 2010 as per the disclosure made by Reliance Industries Limited.
The change is significant since the LLP structure is being used for the first time by a promoter for tax efficiencies as they don't have to pay dividend distribution tax (DDT) if they adopt to redistribute their earnings as dividends among partners.
Further, minimum alternate tax (MAT) on assets too does not apply, though the revised direct tax code (DTC) has corrected this concern. Finally, LLP model helps reduce incidence of wealth tax in case of wealth distribution is undertake
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