Issue of equity shares instead of payment pf rent

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revanth (Querist)

24 June 2013 one private limited company wants to issue equity shares instead of payment rent to the owner? is it correct to issue the shares ? what are the tax benefits to the company?

TKKKKKK

TKKKKKK (Expert)

24 June 2013 There is not any tax benefit. but company wants to save cash .. and yes issue of share is also consideration and company can do it.

Ajay Mishra

Ajay Mishra (Expert)

24 June 2013 Hi

You can do so, but for this u will make an agreement with owner for subscribing shares instead of taking rent.Without consent/agreement you can not issue shares against rent.

revanth

revanth (Querist)

25 June 2013 if the receiver of the rent should pay any tax for receiving the equity shares instead of future income? i.e, the company wants to issue the equity shares in advance? what are the tax issues

Ajay Mishra

Ajay Mishra (Expert)

25 June 2013 You can not allot shares without receiving any consideration. Advance allotment is prohibited.

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