A private limited company has been formed by two pormoters. Promoters group decided to incorporate the company with INR 5 crore capital as an intial stage investment for starting the business operations. So this 5 crore amount is capital gain of the company or not?
If yes so is this amount taxable?
It's a capital contribution and the profit or loss in not arising to company or any director so it cannot be considered as capital gain.
Hi Rahul,
In terms of law the business and the owner r 2 seperate entities, when u have introduced capital into business it is a loan given to the company, there wont be any capital gain tax for the intro of capital.
when the co is doing any investment in other co shares, then capital gain would come into picture..
Agreed with Punith Completely!!
But when promoter group of company sell there stake to investor group to raise money for expansion of business , is that amount treated as capital gain of company?
But when promoter group of company sell there stake to investor group to raise money for expansion of business , is that amount treated as capital gain of company?
It is not capital gain
If the promoters will sale their stake by selling their shares than capital gain will arise and promoters of the shares will be liable for CG. If expansion is made by further issue of shares because of which the holding % of promoters are reducing than the capital gain will not arise and company or promoters will not be liable to capital gain.
A R JADHAV AND ASSOCIATES
Mumbai
CA Inter
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