NPCIL Asset Transfer to ASHVINI Tax-Neutral 2026 Section 47

What Happened?

The Central Board of Direct Taxes (CBDT) has recently notified Notification No. 91/2026, which grants tax-neutral status to the transfer of capital assets by NPCIL (Nuclear Power Corporation of India Limited) to ASHVINI (a newly formed government entity or restructured entity). This notification is effective for Financial Year 2025-26 (Assessment Year 2026-27) and applies section 47(viiaf) of the Income Tax Act 2025.

In practical terms, this means that when NPCIL transfers its capital assets to ASHVINI, neither party will face any capital gains tax liability on this transfer. This is a major tax relief for strategic reorganization of public sector assets in the nuclear and energy sector.

Background & Legal Context

Section 47 of the Income Tax Act 2025 is a crucial provision that lists various transfers of capital assets which are NOT treated as "transfer" for capital gains tax purposes. In simple words, if an asset transfer falls under any clause of section 47, no capital gains tax is triggered.

Section 47(viiaf) specifically deals with transfers of capital assets in cases where:

• The transfer is between government entities or public sector undertakings
• The transfer is made for strategic reorganization of public sector
• CBDT notifies such transfers as tax-neutral in public interest
• The notification specifies the conditions and applicability

This section was introduced in the Income Tax Act 2025 to facilitate government policy objectives, especially in sectors like nuclear energy, defense, strategic industries, and infrastructure. The old Income Tax Act 1961 did not have such specific flexibility — it had general provisions under section 47(vi) and (vii) which required specific conditions to be met.

Key Difference from Old Act: Under the previous Income Tax Act 1961, the government had to go through elaborate procedures to grant exemptions for each asset transfer. The Income Tax Act 2025 streamlined this by empowering CBDT to directly notify transfers as tax-neutral, making the process faster and more transparent.

ASHVINI — The Receiving Entity: ASHVINI appears to be either a newly incorporated government entity or a restructured public sector undertaking created for strategic asset consolidation in the nuclear or energy sector. The notification treats both NPCIL and ASHVINI as "specified persons" for this exemption.

What Does This Mean for You?

If You Work in NPCIL:

• The company can now transfer its capital assets (land, buildings, machinery, equipment, investments, etc.) to ASHVINI without triggering any capital gains tax
• There will be no need to calculate the cost of acquisition, depreciation, or fair market value for tax purposes
• The transfer can be completed at book value or any other valuation agreed between the entities
• No income will be added to the profit and loss account of NPCIL for tax purposes due to this transfer

If You Hold NPCIL Shares or Bonds:

• If you are a shareholder and the asset transfer causes any reorganization of NPCIL (like merger, demerger, or restructuring), you may still benefit from the rollover relief under section 47
• However, this notification specifically applies to NPCIL and ASHVINI; individual shareholder benefits depend on whether a scheme of arrangement is also notified
• Monitor the stock exchange announcements for detailed scheme of arrangement, if any

For Employees and Pensioners:

• This notification does not directly impact salary income or pension
• However, it may affect gratuity, leave encashment, or other terminal benefits if there is a restructuring involving NPCIL
• If you receive such benefits post-restructuring, they are still taxable under sections 10(10C) and 10(10CC)

For the Nuclear Industry Sector:

• This demonstrates the government's commitment to strategic consolidation without imposing immediate tax burdens
• It may encourage other public sector undertakings to undertake necessary restructuring and modernization
• It facilitates faster asset optimization and operational efficiency in critical sectors

For Tax Auditors and Compliance Professionals:

• If you audit NPCIL or ASHVINI accounts, you need to ensure proper disclosure in the audit report (Form 3CA/3CD)
• The transfer should be clearly documented with reference to CBDT Notification No. 91/2026
• No provision needs to be created in the financial statements for deferred tax on this transfer
• The transfer should not be classified as a taxable transfer for any compliance reporting

What Should You Do Now?

Action Items for NPCIL/ASHVINI Officials:

• Compile Asset Schedule: Prepare a comprehensive list of all capital assets to be transferred, including cost of acquisition, depreciation claimed, and current book value
• File Transfer Documentation: Maintain certified copies of the transfer deed, board resolutions, government approvals, and the CBDT notification with all records
• Notify in Tax Returns: When filing ITR (Form ITR-7 for NPCIL/ASHVINI), disclose the asset transfer and specifically reference section 47(viiaf) and CBDT Notification 91/2026
• Update Financial Statements: In the notes to accounts, clearly state that the transfer is made under a specific CBDT notification and does not trigger any tax liability
• Inform Tax Audit Authorities: Ensure your CA/auditor is aware of this notification so it is properly reflected in audit reports filed with income tax department

Action Items for Individual Stakeholders:

• If you are a shareholder in NPCIL, monitor the company's announcements and stock exchange disclosures regarding the restructuring
• If you receive any corporate action (stock splits, dividends, or scheme of arrangement), verify whether it qualifies for exemption or rollover relief under section 47
• Retain all communication and official documents related to the restructuring for future reference in case of any tax notice

Action Items for Tax Professionals:

• Download and preserve CBDT Notification No. 91/2026 for your client records and professional references
• Update your tax planning database and client advisory materials with this new notification
• Brief your clients in the nuclear, energy, or public sector about this significant development
• Prepare audit checklists to ensure compliance with this notification

Key Takeaways

• Tax-Neutral Transfer: NPCIL's asset transfer to ASHVINI under CBDT Notification 91/2026 is completely exempt from capital gains tax under section 47(viiaf) of Income Tax Act 2025 for AY 2026-27.
• Strategic Policy Tool: Section 47(viiaf) is the government's modern mechanism to facilitate strategic reorganization and consolidation of public sector undertakings without immediate tax consequences.
• Proper Documentation Required: Both transferor and transferee must meticulously document the transfer with reference to the CBDT notification and ensure full disclosure in tax returns and audit reports.
• No Tax Burden on Companies: Neither NPCIL nor ASHVINI will have any capital gains tax liability, no provision for deferred tax is required, and the transfer can be recorded at any mutually agreed valuation.
• Individual Shareholders May Need Separate Relief: While the corporate transfer is tax-neutral, shareholders and employees should separately verify their own tax position, as this notification specifically applies to the two entities and may not automatically extend to individuals holding securities.

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