Capital gain tax in the hands of partnership firm
This query is : Resolved
17 October 2011
A partnership firm was formed by 2 partners on 28.11.1995. However there are no transactions of sale and purchases till now.
Land & building was purchased by the firm on 8.2.2002 for Rs 50,000/- and sold on 30.8.2011 for Rs 7,50,000/-. Hence there is capital gain tax in the hands of firm.
How the tax liability in the hands of the firm can be reduced to the minimum?
What is the taxability in the hands of partners, if sale proceeds are distributed to parners on closure of firm?
Land & building was purchased by the firm on 8.2.2002 for Rs 50,000/- and sold on 30.8.2011 for Rs 7,50,000/-. Hence there is capital gain tax in the hands of firm.
How the tax liability in the hands of the firm can be reduced to the minimum?
What is the taxability in the hands of partners, if sale proceeds are distributed to parners on closure of firm?
17 October 2011
In my humble opinion, the tax should be paid at 20% flat by the firm.. It wont be logical to add fake improvement costs and deflate the gain.
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18 October 2011
Thank u Mr. Yash for your reply. I am totally against adding fake improvement costs, but i want to consider investment option in specified bonds u/s 54EC.
Is it advisable? If yes, should the firm be continued for another 3 years, as the investments in bonds will be realized after 3 years.
How to do tax planning in the hands of partners, for receipts on closure of the firm?
Is it advisable? If yes, should the firm be continued for another 3 years, as the investments in bonds will be realized after 3 years.
How to do tax planning in the hands of partners, for receipts on closure of the firm?
18 October 2011
Thank u Mr. Yash for your reply. I am totally against adding fake improvement costs, but i want to consider investment option in specified bonds u/s 54EC.
Is it advisable? If yes, should the firm be continued for another 3 years, as the investments in bonds will be realized after 3 years.
How to do tax planning in the hands of partners, for receipts on closure of the firm?
Is it advisable? If yes, should the firm be continued for another 3 years, as the investments in bonds will be realized after 3 years.
How to do tax planning in the hands of partners, for receipts on closure of the firm?
18 October 2011
Hi Anthony,
In my opinion, investing in 54EC bonds is good option. But keep firm operative for next three years as the maturity proceeds may need bank account of firm.
Also there will be no taxes in the hands of partners on closure of the firm.
In my opinion, investing in 54EC bonds is good option. But keep firm operative for next three years as the maturity proceeds may need bank account of firm.
Also there will be no taxes in the hands of partners on closure of the firm.
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19 October 2011
Hi Ashish,
Thanks a lot for ur reply. I think any receipt over & above credit balance in capital & current A/c's is subject to capital gain tax in the hands of partners.
Please let me know if there is any tax planning to reduce tax liability of partners to the minimum.
Thanks a lot for ur reply. I think any receipt over & above credit balance in capital & current A/c's is subject to capital gain tax in the hands of partners.
Please let me know if there is any tax planning to reduce tax liability of partners to the minimum.
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