The Reserve Bank of India has directed the bank to revise the accounting scheme and the deal structure.
The regulatory diktat has forced the country's third-largest private sector bank to miss the first date to close the deal.
In November 2010, while announcing the deal, Axis Bank's Managing Director and Chief Executive Officer, Shikha Sharma, had said the transaction was expected to be completed in four to six months.
"The process of obtaining regulatory approvals for the transaction is under way and the combined revenues will thus not be reflected in the earnings of Q1 (first quarter ended June 30)," Axis Bank spokesperson told Business Standard in an emailed response last week.
Sources said the tax liability due to the change in the accounting scheme and the deal structure could be a potential deal breaker and the bank was exploring different options to minimise the hit.
While RBI has given approval in principle to the deal, it has questioned why Axis Bank shares have been offered to Enam shareholders when Axis Securities and Sales, a wholly-owned subsidiary of the bank, is acquiring the businesses.
Sources said the bank was exploring different options to revise the deal structure without attracting any additional tax burden.
The recent high-profile
legal battle between mobile phone service provider Vodafone and the Income Tax Department had made the bank more cautious, sources said.
Tax experts said one way to revise the deal structure was Axis Bank acquiring Enam's businesses and then transferring these to its wholly-owned subsidiary.
"Transfer of businesses to wholly-owned subsidiaries is exempted from capital gains tax," said a partner of one of the country's top law firms.
However, another tax expert said if the transaction involved transfer of tangible assets, it might attract higher stamp duties.
Axis Bank did not comment on this issue.
The bank had earlier said Enam would de-merge its equities and investment banking businesses into a wholly-owned subsidiary of Axis Bank. The bank will also de-merge its investment banking business into this subsidiary.
Shareholders of Enam will get 5.7 shares of Axis Bank for every one share in the broking company.
In other words, Enam shareholders will get a 3.3 per cent stake in the bank on enlarged capital.
Earlier, RBI had stalled Axis Bank's plan to induct Vallabh Bhansali, co-founder and chairman of Enam, as an independent director on the bank's board.
RBI had said "no shareholder of Enam acquiring shares of Axis Bank under the scheme of arrangement would be eligible for being a director on the board of the bank."
Axis Bank is currently exploring ways of working with Bhansali since he cannot be a part of the bank's board.