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No tax concession on gains in Satyam open offer
March, 16th 2009

No tax concession will be available to those Satyam shareholders, who would be selling their shares after the open offer is made by a strategic investor in the fraud-hit IT firm, official sources said.

"There is no case for tax concessions to be given to Satyam shareholders as is being aired in certain quarters," the sources said.

The question of tax concession arises only in case of short-term capital gains, as long-term holder of Satyam shares would in fact be incurring loss as the scrip plummeted after the company's disgraced founder Chairman Ramalinga Raju confessed to fudging of accounts.

Since the gains would be made only in case of those who would have bought the shares recently, the sources said such shareholders would have to be taxed as they made a killing in the stock market.

About long-term shareholders, who would be holding the scrip for more than a year, the question of tax does not arise at all since they would in fact be making losses, the sources added.

Shares of the company were trading at over Rs 170 before the fudging of accounts book was revealed while the same shares are trading at about Rs 45 now after hitting the low of Rs 11 on the Bombay Stock Exchange.

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