Capital gain profit distribution among partners of partnership firm
This query is : Resolved
05 July 2026
Dear Experts,
A partnership firm is selling a property to 3 individuals , out of which 1 is existing partner.
This transaction results in capital gain for the partnership firm. After capital gain tax is paid, can the partnership firm distribute the balance amount to existing partners including to the partner who has purchased the property? Will distributing share of capital gain result in taxable transfer?
Please advice
Regards,
A partnership firm is selling a property to 3 individuals , out of which 1 is existing partner.
This transaction results in capital gain for the partnership firm. After capital gain tax is paid, can the partnership firm distribute the balance amount to existing partners including to the partner who has purchased the property? Will distributing share of capital gain result in taxable transfer?
Please advice
Regards,
05 July 2026
Can the balance be distributed? Yes. After the firm pays the capital gains tax, the remaining profit can be distributed to all partners in their profit-sharing ratio, including the partner who was one of the property buyers.
Is the distribution taxable? No. Under Section 10(2A) of the Income Tax Act, a partner's share in the profit of a firm is exempt from tax in their hands, as the firm has already paid the tax on the gains.
Is the distribution taxable? No. Under Section 10(2A) of the Income Tax Act, a partner's share in the profit of a firm is exempt from tax in their hands, as the firm has already paid the tax on the gains.
You need to be the querist or approved CAclub expert to take part in this query .
Click here to login now
Click here to login now
Similar Resolved Queries
Unanswered Queries
- ITDS U/S.194T of Firm
- Unregistered suppliers utility
- Difference between Date of Payment and Date of Deduction?
- Tax Audit Applicability – Newly Formed Partnership Firm with Profit Below 6%/8%
- Non-Compliance documents have not been submitted by the contractors debited
- URGENT-Eligible leaves being shown as 24 days for 3 years Articleship instead of 156 days in 108
- Journal entry of busniess expenses
- Invertaded duty struture
- Cash balance limit and property purchases limit
- EXPORT COMMERCIAL INVOICE HSN CODE
- GST not cancelled by tenant
- RCM @ 5% on Hamali charges, Transport Charges, Unloading charges we take ITC or not
- CALCULATION OF DEFFERED TAX - OP BL IS DTL & CURRET IT DTA
- LLP audit under companies act
- Experienced CA recommendation from Kolkata for FNO return filing
- Interest Reporting in Form 168
- Sales of goods of amount Rs77 lakhs to a party
- Tax Demand of ₹4,650 for AY 2026-27
- Concept of Vendor and customner reconciliation
- Mistake in e-invoice identified after 24 hours
Trending Online Classes
-
DT & Audit (Exam Oriented Fastrack Batch) - For May 26 Exams and onwards Full English
CA Bhanwar Borana & CA Shubham Keswani
Subscribe to Pro
Join an elite circle of professionals
CAclubindia
