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Circular in Works on Tax Recovery from Cos under IBC

The government will issue a circular to facilitate recovery of tax dues from companies undergoing insolvency that may require new buyers to settle “agreed tax claims” while a resolution package is approved. The revenue department will discuss the necessary changes with the Ministry of Corporate Affairs (MCA) that administers the Insolvency and Bankruptcy Code (IBC). The move is aimed at providing clarity following a Supreme Court judgement. The issue was discussed at the Goods and Services Tax Council meeting Saturday, and it was agreed that more clarity was required regarding the treatment of statutory dues under the IBC. After the meeting, the finance ministry said a circular will be issued for clarifying the issue of treatment of statutory dues under the GST law. S-ET.

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