Regarding Transfer of Asset
This query is : Resolved
08 December 2025
When A Partner Transfers his assets to Partnership firm , whether it will be considered as Sale of assets or not ? if , yes , Whether it will be taxed as capital gain or not ?
08 December 2025
Yes, when a partner transfers his personal asset to the partnership firm as capital contribution, it is treated as a transfer under Section 45(3) and accordingly it will be taxed as capital gain, and the value recorded in the books of the firm is taken as the full value of consideration for computing the capital gain.
09 December 2025
As per Indian Income Tax Act Section 45(3), when a partner transfers a capital asset to the firm as their capital contribution:
It's not treated as a transfer for capital gains purposes
No capital gains tax is levied at the time of contribution
Conditions to Avoid Capital Gains Tax:
The asset must be transferred as capital contribution (not as sale)
The partner's capital account should be credited with the value of assets
The asset should be recorded in the firm's books as a capital asset
The firm must use it for business purposes
When Capital Gains MAY Arise:
If the asset is transferred for consideration other than partnership interest (like cash payment)
If it's structured as a sale rather than capital contribution
The partnership firm takes over the asset at the same cost and holding period as the partner, which means any future sale by the firm will consider the original cost and holding period for capital gains calculation .
It's not treated as a transfer for capital gains purposes
No capital gains tax is levied at the time of contribution
Conditions to Avoid Capital Gains Tax:
The asset must be transferred as capital contribution (not as sale)
The partner's capital account should be credited with the value of assets
The asset should be recorded in the firm's books as a capital asset
The firm must use it for business purposes
When Capital Gains MAY Arise:
If the asset is transferred for consideration other than partnership interest (like cash payment)
If it's structured as a sale rather than capital contribution
The partnership firm takes over the asset at the same cost and holding period as the partner, which means any future sale by the firm will consider the original cost and holding period for capital gains calculation .
09 December 2025
Yes, as rightly highlighted by Dhirajlal sir, tax implications arise only if the transaction resembles a sale or involves separate consideration
Message likes :
1 times
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
- ESI Contribution after implementing COSS
- FY 24-25 Invoice Booked in FY 25-26 & ITC Claimed in FY 25-26
- Outward HSN details in Table 17 - unable to enter more than 6 HSN codes - Reg.
- Cg on ancestral property sale distribution
- Negative liability in GSTR-3B
- TDS deduction liability ?
- Query on applicability of Small Company, CARO & IFC
- Can huf give gift to karta or kartas wife and son
- Filing return under 44ADA
- Gst itc related queries
- POINT NO. B(8) OF FORM NO. 15CB
- Change details filed in original return
- Treatment of professional fee to employee
- GSTR-9 Schema Validation Issue
- STOCK TRANSFER ENTRY IN TALLY PRIME
- Accounting of branch but having one current Account
- GSTR-9 Annual Return
- Articlehsip_temination
- Salary journal entry
- Design work
Trending Online Classes
-
FR & Direct Tax (Regular Batch Combo) For May 26 & Onwards
CA Bhanwar Borana & CA Aakash Kandoi
CAclubindia
