J. D. Shah Associates
Quick Summary
What is a Slump Sale? According to Section 2(42C) of the Income Tax Act, 1961, a 'slump sale' refers to the transfer of one or more undertakings as a result of the sale for a lump sum consideration, without individual values being assigned to the assets and liabilities. This method is commonly used
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FAQ :
A slump sale is the transfer of one or more undertakings for a lump sum consideration, where individual values for assets and liabilities are not assigned. This is covered under Section 2(42C) of the Act.
No, indexation benefits are not available for capital gains arising from a slump sale, even for long-term capital gains.
Net worth is calculated by summing the written-down value of depreciable assets and the book value of other assets, then subtracting the book value of liabilities. If negative, the cost of acquisition is zero.
Gains or losses from a slump sale are treated as capital gains. Long-term capital gains (held over 36 months) are taxed at 20% under Section 112, while short-term capital gains are taxed at normal rates.
No, TDS deduction is not required under Section 194IA for slump sales.
Companies must furnish a report from a Chartered Accountant in Form 3CEA, certifying the net worth computation, by the due date for filing income tax returns as per Section 44AB.
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