Hello,
I wanted to know, If as a partner of a Private limited company, I sell my shares to the other 2 partners and quit the company, will there be any tax libality on the amount i received ? If yes, are there any means and ways to avoid it.?
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Tax on the capital gain
Replies (1)
This matter is disputed.
Option 1 : U can claim the income as Inc from capital gains. U will be taxed under long term cap gain rates if you have held the shares for more than a yr. U can take benefit of exemption under sec 54EC or 54F
Option 2 : If you were the promoter of the company and the agreement of sale of shares contain clauses pertaining to renunciation of management rights and non compete clause, then the chances are that the IT Dept shall treat the income as business income. In that case the tax liability will be tremendous. there is an ITAT ruling supporting this.
I would advise that word your agreement properly so as to keep out the chances of taxability under business head.
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