I have to convert a sole proprietorship to a private limited company.
The capital gain on this transfer is exempt from tax if i fulfil all the conditions under section 47(xiv).
But if i dont fulfil all the conditions, what will be the tax implication?
What will be the full value of consideration of the assets transferred for the purpose of calculating the Capital Gain?
Section 45 will apply, is nothing but capital gain charging section.
for depreciable assets book value is the cost
non depreciable assets the actual cost or indexed cost of the asset is the cost. excess over the cost received from the company or asset purchaser is taxable as capital gain.
Thanks.
But my further query is, the sole proprietor is himself converting the concern into a company and will be 100% owner of the newly formed company.
So there is no question of receiving of excess over the cost of the assets, or receiving any consideration for that matter.
So is there any provision for notional value of consideration in such case?
There is no provision of notional price in this case.
Actual transfer price will be taken as full value of consideration and same will be taken as COA in the hands of newly formed company.
Do you need a Business Valuation for the Proprietorship firm.
What are the legal formalities?
Thanks
What is the treatment in terms of ROC Compliances for Conversion matters
??
CAclubindia
