Merger of Pvt Ltd Co

The ₹70 lakh machinery value does not, by itself, decide which route is better. A direct sale is usually simpler if the ₹50 lakh company has no material liabilities and the machinery can be transferred at a properly supported fair value. Since the companies are related, document the valuation and approvals, and check the applicable Companies Act related-party requirements. The seller may have capital-gains or business-income consequences depending on the asset’s tax block and sale value; the buyer’s depreciation claim and GST input-tax credit depend on the transaction documents, tax value and eligibility conditions. GST on the sale and any reversal or transfer of unutilised ITC should also be checked.

Merger: Consider this where the companies have business, contracts, employees, losses or other assets/liabilities worth transferring together. It requires a scheme and the applicable NCLT/Companies Act process, with accounting, tax, GST and ROC consequences; it is generally more involved than a machinery sale.
Before choosing: Compare the machinery’s written-down tax value, GST credit history, market value, accumulated losses, creditors/loans, and whether the ₹50 lakh company is solvent. A sale does not itself close that company: after settling liabilities and completing filings, assess strike-off eligibility or another closure route. Paid-up capital alone is not a deciding tax or ROC factor.

The decision should be modelled alongside the machinery transfer, GST documentation and the proposed closure or merger filings. Manual work across valuation, tax and ROC compliance is difficult; automation can reduce repetitive tasks while professional judgment remains in control. At Jir AI, our 2,000+ AI agents and 650+ integrations streamline GST, ITR, TDS, TCS and other compliance workflows, helping reduce manual workload by up to 70%. For a more efficient compliance workflow, connect with us on WhatsApp: https://wa.me/message/3HVOZ7HIY4ESC1