One of my clients is having paid up capital of INR 1 lakh and is having an investor to whom he is selling 12.5% stake at INR 30 Lacs. He is planning to bring entire money into company, rather than selling his own shares out of company. Now I want to know how he can bring in 30 lacs in company with getting involved into capital gain issue.
He might not have desired net worth in current books.
06 April 2015
Here, transfer of shares would be involved for sure. Hence, Capital Gains Tax would be applicable. If you wanted to bring in money as share capital, sec 56 (2) (vii) c would be applicable. I.e, if the shares are issued at a premium and if it is above the fair value of the shares, the difference between the fair value and issue price would become the income of the company as 'Income from other sources'.
If you wish to bring in the money as loan from diector, Companies Act is having many stringent provisions to curb those issues.
Best way is to allot him shares for the full value or else transfer those shares and pay capital gains tax. If that is the case, you can not bring in cash as 'Loan from Directors.' Cos Act is having many prohbitions regading this issue.
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