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Capitla gain tax if land invest in firm as capital

rajesh (Accountant) (583 Points)

29 September 2012

Dear Sir

I am Member in HUF I Have a Vacant Land in my HUF Books i want to start Real Estate Business.

I was Create a FIRM and I want Invest My Land(HUF Books) as My Capital In FIRM at this time I have any Liable to pay Capital Gain Tax on Transfer of Land

Please Tell

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1 Replies

CA Harsh Lunia (Audit) (81 Points)
Replied 01 October 2012

Assuming that the land that you are talking about is not a rural land and hence, is a capital asset, its transfer will be chargeable to capital gains

As per section 45(3) of the income tax act, any transfer of a capital asset by way of contribution towards capital in a firm will be taxable. The sale consideration for this purpose will be taken to be the value at which such transfer is recorded in the books of the firm.