Transfer of sole proprietary business from father to son

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

13 May 2013 Hello

Could anyone please explain me the procedure for transfer of sole proprietary business of father to son.

Whether intimation to the Income tax department is required to be given?

Your early response to this query is highly appreciated.

Querist : Anonymous

Querist : Anonymous (Querist)

17 May 2013 Hello

Could anyone please provide me with a sample of deed of gift of business ownership from father to son.

Thank U!

Aashok Kumar Sharma

Aashok Kumar Sharma (Expert)
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02 August 2025 Transferring a sole proprietorship business from father to son involves a few key steps since a sole proprietorship is not a separate legal entity—it's directly linked to the owner. Here’s a clear outline for you:

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### 1. **Transfer Procedure**

* **Deed of Assignment / Sale / Gift**:
The father (transferor) should execute a **deed of assignment or gift deed** transferring the business assets, goodwill, liabilities, contracts, licenses, and other business interests to the son (transferee).
This document should clearly state what is being transferred and whether consideration (money) is involved or if it’s a gift.

* **Intimation to Authorities**:

* **Income Tax Department**: The new owner (son) should inform the Income Tax Department by filing a **new PAN application** if needed and updating the existing PAN details for the new ownership.
* **GST Registration** (if applicable): Update or apply for a new GST registration in the son’s name.
* **Other Licenses/Registrations**: Transfer or obtain fresh licenses, registrations, or permits under the son’s name.

* **Bank Accounts**: The bank accounts should be updated or new accounts opened in the son’s name.

* **Assets Transfer**: If there are immovable assets, they may need to be legally transferred by executing separate sale deeds and registering with the relevant authorities.

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### 2. **Is Intimation to Income Tax Dept. Required?**

* While there’s no strict legal obligation to intimate the Income Tax Department specifically about the transfer of a sole proprietorship, it is **prudent and recommended** to update all records related to business ownership for tax and compliance purposes.

* The son will need to **file returns under his PAN** going forward.

* If the business is registered under GST or other registrations, those should be updated to reflect the new ownership.

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### 3. **Sample Deed of Gift of Business Ownership**

Here’s a simple framework you can use for a **Deed of Gift of Business**:

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**DEED OF GIFT**

This Deed of Gift is made on this \_\_\_ day of \_\_\_\_\_\_**, 20** by **\[Father’s Name]**, residing at \_\_\_\_\_\_\_\_\_ (hereinafter referred to as the “Donor”) in favor of his son **\[Son’s Name]**, residing at \_\_\_\_\_\_\_\_\_ (hereinafter referred to as the “Donee”).

WHEREAS the Donor is the sole proprietor of the business known as **\[Business Name]** situated at \_\_\_\_\_\_\_\_, carrying on the business of \_\_\_\_\_\_\_\_.

NOW THIS DEED WITNESSETH AS FOLLOWS:

1. The Donor hereby gifts, assigns, and transfers absolutely all the assets, goodwill, trade name, business contracts, liabilities, licenses, and interests relating to the sole proprietorship business known as **\[Business Name]** to the Donee.

2. The Donee hereby accepts the gift and agrees to take over the business along with all rights and responsibilities with effect from \_\_\_\_\_\_\_\_.

3. The Donor affirms that the business is free from any encumbrances except those disclosed to the Donee.

4. This gift is made voluntarily without any coercion or undue influence.

IN WITNESS WHEREOF, the parties have executed this Deed of Gift on the day, month, and year first above written.

Signed by:

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\[Father’s Name] (Donor)

Signed by:

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\[Son’s Name] (Donee)

Witnesses:

1. ---
2. ---

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If you want, I can draft a more detailed deed customized to your needs. Would you like that?

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