Company ( removal of name from property)

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

02 August 2018 sir I a owner of a company, company is owner of a land in name of company, selling in name of company leasds to heavy capital gain so any procedure to transfer land in name of individual (shareholder) as it is rural agriculture land. similarly stamp duty value of same land is different for individual and company, stamp duty (market value) as per register office is double in case of company

Nikhil Kaushik

Nikhil Kaushik (Expert)
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04 August 2018 transfer to shareholder too will attract significant tax liabilities as you will have to pay stamp duty for transfer. plus will have to account for deemed dividend etc implications

Querist : Anonymous

Querist : Anonymous (Querist)

02 September 2018 sir any other method such as sale of company under slum sale to save capital gain

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Asha Kanta Sharma online

Asha Kanta Sharma

(Expert)
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19 July 2024 In India, if you're considering ways to mitigate capital gains tax on the sale of a company, including through methods like "slump sale," it's important to understand the legal and tax implications involved. Here’s a brief overview:

### Slump Sale:
A slump sale refers to the transfer of an undertaking or business by one entity to another. Instead of selling individual assets and liabilities separately, the entire business is sold as a going concern. This method is typically used to facilitate a smooth transfer of business operations and can sometimes be advantageous for tax planning purposes.

### Capital Gains Tax Implications:
When a slump sale occurs, the transferor company (seller) may incur capital gains tax on any gain arising from the transfer. The capital gains are computed as the difference between the net worth of the undertaking transferred and the consideration received for such transfer.

### Mitigating Capital Gains Tax:
Here are a few considerations that can potentially help in mitigating capital gains tax:

1. **Indexation Benefit**: Capital gains can be computed after adjusting for inflation (indexed cost of acquisition) if the assets are held for the long term (more than 3 years for movable assets and more than 2 years for immovable assets).

2. **Exemption under Section 54/54F**: If the sale proceeds are reinvested in specified assets like residential property (under Section 54) or any other specified assets (under Section 54F), capital gains tax can be exempted or reduced.

3. **Tax Planning through Slump Sale**: Structuring the slump sale transaction carefully can sometimes provide tax advantages, such as minimizing taxable gains by allocating a higher portion of the consideration to assets with a lower tax impact (like depreciable assets).

### Consultation with Tax Experts:
Given the complexity of tax laws and the specific circumstances of each case, it is advisable to consult with a qualified tax advisor or chartered accountant who specializes in corporate taxation. They can provide personalized advice based on your company's situation and goals, ensuring compliance with legal requirements while optimizing tax efficiency.

### Conclusion:
While a slump sale can be a viable option for transferring a business as a going concern and potentially mitigating capital gains tax, careful planning and professional guidance are crucial to navigate the process effectively. Understanding the nuances of tax laws and leveraging available exemptions and benefits can help in optimizing the tax outcome of the transaction.

Nikhil Kaushik

Nikhil Kaushik (Expert)
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21 July 2024 do not waste your time with 6 year old queries. respond to current ones. its not a competition!!