SLUMP SALE

One big company wants to sell off majority of its business (Assets & Liabilities) through slump sale.  Following will be the approximate figures are

 

 

Fixed Assets 180
Current Assets 40
Liabilities /Loans -680
   
Net Assets taken over by Buyer -460
   
   
Consideration given to Seller -180
   
So total gain to seller is  460+180

Is there any applicability of VAT AND CAPITAL GAIN Under Income Tax Act.


 

Replies (1)

In the instant case, the implications for slump sale would be as follows.

  • Income Tax - Sales consideration to be reduced by net worth. For Net worth computation, immovable property to be considered at Circle rates (so fixed assets valuation may materially alter)
  • VAT - no Vat applicablity, Already number of decisions that 'business' per se is not goods if sold as going concern
  • Stamp duty - Some states require payment of duty on business sale under the entry of "conveyance". So, do check the same also (UP Stamp authorities have considered business transfer under scheme of demerger as conveyance and chargeable to duty)

Let me know if you require any further clarifications.

thanks and regards

Akhil Bansal., C.A

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