Query Regarding Income Tax Rate on Gain from Transfer of Partnership Stake (LLP Partner)

This query is : Resolved

Quick Summary

Transfer of LLP stake may trigger tax based on structure. If it leads to dissolution, tax applies as per firm dissolution rules. If transferred to another or new partner, firm may need revaluation and tax on resulting gains.

pooja Garg

pooja Garg (Querist)
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09 March 2026 Hi,

I have a query regarding the income tax implications on the transfer of a partnership stake.

For example, an LLP has three partners—two are individuals and one is a company. The company partner has purchased the stake of the remaining two individual partners.

Now, the two individual partners would like to understand the applicable income tax rate on the gain arising from the transfer of their partnership stake to the company partner within the LLP.

Additionally, they would like to know what the applicable tax rate would be if the stake is transferred to an external entity outside the LLP.

Kindly clarify the applicable tax treatment in both scenarios.

Thanks.

Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)
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09 March 2026 In first instance, partnership gets dissolved as there cannot be single partner in the entity, hence the liability will be as per dissolution of partnership firm,
In second instance consider the reevaluate the balance sheet of the firm as on the date of addition of new partner and deletion/removal of the individual partners and pay tax (by the firm) as per new capital formation/ gain by the firm.

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pooja Garg

pooja Garg (Querist)
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13 March 2026 Thank you for suggestion.

Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)
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13 March 2026 You are welcome.

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