PVT LTD TO LLP ; SHARE CAPITAL TO PARTNERS FUND TREATMENT

Hello Mam,

Thank you for assistance .

My question is in respect to my Individual capacity not as per firm's view .

As informed I purchased Shares Worth Rs.50,000/- & payed Rs. 5,00,000/- as premium to the buyer in 2017 , then the whole company is now concerted to LLP in 2023 , now let's suppose , I sell my Partnership to someone after 3 years for Rs. 10,00,000/- , now will I Pay taxes on Rs.9,50,000/- (10 Lakh - 50 Thousand ) or Rs.4,50,000/- ( 10 Lakh - 5.5 Lakh ) 

Please advise

First of all, LLP would pay tax u/s 56 on securities premium transferred from company to LLP. For shareholder (converted partner into LLP), capital gain would be calculated in year of conversion of all conditions mentioned in section 47(xiiib) not fulfilled at the time of conversion. In your case, sale consideration would be value of capital in LLP i.e 5,50,000 and cost of acquisition would also be the same (5,50,000). While selling your partnership interest, capital gain will be calculated as difference of actual sale consideration received and COA of LLP interest which will again be 5,50,000 in your case.