First, people usually follow dissolution accounting. They will sell off the assets, clear the out the liabilities and the residual net worth, also known as equity is the value of the firm. 

The measurement criteria for disposals is ‘lower of carrying amount or FVLCS’. If you browse through IndAS, you will find details of disposals in a separate  standard- Non current assets held for sale. Another standard emphasises on- Disposal of subsidiaries. 

The closing of the business for unlisted companies is same as dissolution accounting again, i.e., profit or loss from disposal after settling all liabilities is taken and settled off with owners capital account. If it is a loss, the owner usually will go bankrupt and vice versa. Eg: after settling off liabilities, a company is worth 1 Million. Purchased the business with .5 million. Then profit on disposal of business is, one million minus half a million minus capital gains taxes. 

https://mca.gov.in/Ministry/pdf/INDAS105.pdf

The above link prescribes treatment which can be used for disposal groups. Also INDAS 105 scope excludes some transaction which are included in the link. 

I think it is best to take further advise from auditors. 

Selling a private limited company in India can usually be done either through a share sale (transfer of shares to the buyer) or, less commonly, through a business/asset sale. In a share sale, due diligence is the first step, where the buyer reviews the company’s financials, compliance, contracts, and liabilities. This step is followed by valuation, negotiation, execution of a Share Purchase Agreement, filing share transfer documents with the MCA, and updating the statutory registers. Valuation is typically based on factors such as financial performance, assets and liabilities, future growth potential, industry position, and compliance status, using methods like discounted cash flow or net asset value. It is important to ensure clean statutory and tax compliance before selling your pvt ltd company. For the structured execution of a company sale, fair valuation, and end-to-end legal support, seeking professional assistance from an expert, such as Setindiabiz, is always advisable.

Selling a private limited company typically involves five structured stages:

1. Preparation and Internal Readiness

• Review legal structure, shareholding patterns, and board resolutions.

• Clean up financial statements (at least 3 years preferred).

• Close pending compliances (ROC filings, tax returns, PF/ESI, GST).

• Determine what is being sold:

  • Share Sale (transfer of ownership)

  • Asset Sale (transfer of assets, brand, IP but not company)

Output: Clear documentation + internal decision note.

2. Valuation and Pricing

Decide valuation method based on business profile:

Key criteria to consider during valuation:

• Revenue consistency and growth trend

• Profitability & EBITDA margins

• Customer concentration risk (any one client >30%?)

• IP, brand value, unique assets, licenses

• Regulatory exposure, pending litigations, liabilities

• Working capital health and debt position

• Sector demand and market multiples

3. Finding Buyers & Negotiation

Potential buyer sources:

• Competitors / industry players

• Investors / strategic buyers

• Business brokers / M&A consultants

• Startup and SME buy-sell platforms

• Chartered Accountants, Investment Bankers, CS networks

Steps:

• Sign an NDA (Non-Disclosure Agreement) before sharing detailed financials

• Provide a teaser deck without sensitive data

• Share a Due Diligence Data Room once serious buyer shows intent

4. Due Diligence & Legal Documentation

Typical documents required:

• Share Purchase Agreement (SPA)

• Share Transfer Form SH-4

• Board Resolution for share transfer

• Updated cap table and register of members

• No-dues certificates (Tax, GST, PF/ESI)

• Intellectual Property and asset transfer documents

Legal professionals (CA + CS + Lawyer) should be involved at this stage.

5. Post-Sale Compliance

After sale approval:

• Update ROC filings (Dir. KYC, share transfer entries)

• Handover key assets: bank access, GST, licenses, IP

• Remove seller as director if stepping out completely

• Capital gains tax planning (important for sellers)

Summary Checklist for the Seller

• Business plan and last 3 years financials updated

• Valuation report or pricing approach finalized

• NDA + buyer qualification

• SPA drafted by lawyer

• ROC, Income Tax, and GST compliances up to date

• Exit tax planning done