"As of now, the I-T law provided the haircut from lenders is income under the IBC and it would be taxed accordingly. If there is any reduction in the interest rate by the lenders in the form of discounted debt instruments, by virtue of the provisions of Indian Accounting Standards (Ind-AS), the valuation in the financial statements will increase the company's profit. In such cases, if the company is under MAT, it will be subject to tax on such profits. This would create a double whammy,"

Riaz Thingna
Director, Grant Thornton Advisory Private Limited

This article appeared in Business Standard on 14th November, 2017.