Mumbai: A large number of recent merger and acquisition (M&A) deals, where the promoters created either separate companies or subsidiaries for the sole purpose of selling stakes, could invite tax scrutiny due to the new slump sales regulations. Almost all large deals in 2020 and 2021, where private equity or other strategic investors picked up stakes, were structured using a special purpose vehicle (SPV) to securitise assets in a separate company, say industry trackers. The new regulations by CBDT mandate that companies value the transferred assets at a “fair market value.”The new rules have also prescribed a methodology for that.Using the new regulations, the taxman is set to challenge the transferring of assets and will demand that additional taxes be paid.“All the transactions where assets were transferred from one entity to another before selling stake to private equity buyers are set to face complications on account of new slump sale regulations,” said Girish Vanvari, founder of tax advisory firm Transaction Square. “In many cases, the question is about a company valuing intangibles like technology and brands that are expensed out in the past, or leasehold real estate assets that are located in industrial zones.”In a slump sale, companies, entities or assets are sold lock, stock and barrel on a going-concern basis.In almost all transactions involving Indian groups where a new company has been carved, assets are valued taking into consideration old slump sale regulations that did not have a precise methodology to value assets.The rules announced recently say that if a company owns various assets such as shares, land, gold or painting, they can be valued individually and then sold. Under old rules, assets need not be valued separately. In several cases, say insiders, companies have reached out to tax lawyers and tax consultants to figure out the impact.