Transfer of business

Tax queries 263 views 9 replies

A father wants to transfer his business (trading of electronic goods) to his son, from 1st April 2017. What legal requirements are required in this process? Will it be advisable to treat it as gift?

Replies (9)

Constitution of business?

Proprietorship

Simple way is to close the business and re-establish in the name of SON.

But sometimes, because of some contractual terms and or goodwill of the business etc., which may be required to transfer to son ( as per your wish to gift business), better idea would be to introduce son as partner. Father may continue till his wish/need as sleeping partner, or may retire at some suitable occasion.

Sir, partnership won't be suitable from income tax point. Actually father is old age and the son is running the business in father's name. Now they want to change the prop. - from father to son. Should gift deed be prepared and how to treat the capital of father?

Sir, please advise?

IF SON IS GOING TO FILE THE RETURN FOR THIS HIS PAN NO WILL OPERATE 

FOR THIS AND BANK A/C , VAT NO, SERVICE TAX NO ECT ALSO 

CHANGE WITH SON`S NAME 

1.Compute the value of the business. 2. Pay off the sundry creditors or obtain their written consent/Noc clearly stating that they have no problem with such transfer. 3. Prepare and execute a sale deed for the transfer of business clearly stating the name of the proprietorship and owner's intention to sell. 4. Pay the amount calculated in 1 above via cheque. 5. Make suitable changes in the Vat department records.

Whether all these requirements be required if father gifts his business to the son? Can a gift deed alone be sufficient, for changes to be submitted in the bank, income tax and sale tax departments?

name of business will change so u have start from new

even u have to open new  bank a/c 

Is it compulsory to change the name of the business, when proprietor is being changed?


CCI Pro

Leave a Reply

Your are not logged in . Please login to post replies

Click here to Login / Register