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Input tax Credit on Slum sale

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Tapu Dosa

54 Points Posted on 28 October 2023

Can transferror (seller) company take input tax credit on slum sale fees paid to merchant bank. Because slum sale is exempt in GST.

Replies (2)

Quick Summary

This discussion explores whether a seller can claim Input Tax Credit (ITC) on fees paid to a merchant bank for a slump sale. While slump sales are exempt from GST, the fees paid for facilitating them are considered input services for an exempt supply, generally meaning ITC is not available. However, some argue these fees relate to the business as a whole and could be apportioned, though the exempt slump sale value would reduce the eligible ITC. For income tax purposes, these fees are deductible expenses.

sabyasachi mukherjee

Profession

19978 Points Posted on 29 October 2023

Yes he can take.

Aashok Kumar Sharma

Finance/Compliance Consultant

75658 Points Posted on 08 November 2026

ITC on merchant banker fees for a slump sale:
• Transfer of a business as a going concern (slump sale) is exempt from GST (Notf 12/2017 Sl. 2). Fees paid to a merchant banker for facilitating the slump sale are input services used for an exempt supply. ITC is not available (Sec 17(2)).
• Some argue the fees relate to the business as a whole (common credit), apportioned under Rule 42. The exempt slump sale value counts as exempt turnover in that period, reducing eligible ITC.
• For income-tax, the fees are "expenditure in connection with the transfer" (deductible in computing the slump sale capital gain, Sec 50B).