Income Tax on a Private Limited Company on sale of asset

Capital gains tax liability would arise.

The company’s liability is not automatically tax on a ₹5 crore “capital gain”. For a company, the amount and tax treatment depend on the building’s tax written-down value (if depreciable), its sale price and transfer expenses, acquisition/improvement costs, and whether it was held as a capital asset or stock-in-trade. A depreciable building forming part of a block is generally dealt with under section 50: the block’s sale proceeds reduce its tax WDV, and a short-term capital gain can arise if the block ceases to exist or sale proceeds exceed the block’s value. The accounting profit alone may therefore differ from the taxable gain.

If ₹5 crore is the taxable capital gain, the company’s tax cannot be determined without its status and applicable regime. For a domestic company, the relevant rate may be 22% under section 115BAA, 25% (subject to turnover conditions) or 30%, with applicable surcharge and 4% health and education cess; special-rate treatment may apply depending on the asset and facts. Please confirm whether ₹5 crore is the sale price, book profit or computed taxable gain, and whether the asset was depreciated.

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