Private limited company sale

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This discussion clarifies the tax implications when a private limited company is sold. The sale involves a takeover of assets and liabilities with an additional payment. The primary tax concern is capital gains tax, which applies differently to depreciated and non-depreciated assets. For shareholders selling their shares, a 20% long-term capital gains tax with indexation is generally applicable and considered beneficial.

Pardeep Kapil

Pardeep Kapil (Querist)

27 September 2022 Dear sir - one of my client having authorised capital of 2 crores.. And three directors have paid up capital of 50 lakhs each to 1.5 crores.. Another company wanted to take over complete assets and liability and pay extra 5 crores.. What will be income tax liability... Kind regards

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)

28 September 2022 Capital gains tax applicable.
Indexation applicable on long term capital gains on assets not depreciated.
Short term capital gains tax applicable on other assets.

Sale of the shares of the company 20% long term capital gains applicable with indexation. This is beneficial.

Pardeep Kapil

Pardeep Kapil (Querist)

28 September 2022 Dear Sir - Therefore all taxation will have to be borne by shareholders...? Please clarify.. Kind regardd

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)

28 September 2022 Yes, in such a case only 20% long term capital gains tax payable with indexation by the shareholders.

Pardeep Kapil

Pardeep Kapil (Querist)

28 September 2022 Thanks for your all guidance... Regards

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)

28 September 2022 you are welcome................