Conversion of partnership firm into llp effect on taxation, pan

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This discussion explores the tax implications of converting a partnership firm into a Limited Liability Partnership (LLP), primarily for marketability reasons. A key question is whether a new PAN number is required. Experts clarify that converting a firm to an LLP does not trigger capital gains tax as it's not considered a transfer of assets, and therefore, no new PAN or stamp duty on property transfer deeds is typically necessary.

rupesh

rupesh (Querist)
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10 January 2024 partnership firm is there which are converting into Limited Liability partnership reason is to upgrade entity for marketable point of view.
but question arised , in this change in entity PAN number could have change or not? becasue we need change in PAN as general thinking. is it correct.

also development agreement had executed in firm by paid stamp duty for property development, by conversion fo entity , shall there need to pay again stamp duty as per transfer of property act, registration act and so on.

pls experts opinion . with kind regards.

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)
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10 January 2024 New PAN number required.
Conversion of firm into Limited Liability Partnership does not give rise to capital gain since no transfer of asset is involved in conversion. When Partnership Firm is converted into Limited Liability Partnership, all the properties of firm shall vest in the LLP. There is no dissolution of firm. Hence Section 45(1) relating to capital gain is not applicable to the Limited Liability Partnership. Further, as there is no transfer of Asset is involved, requirement of transfer deed is not necessary and hence no stamp duty is payable.

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rupesh

rupesh (Querist)
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24 January 2024 THANKS shri seetharam sir

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)
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25 January 2024 You are welcome...
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