What is slump sale? | Trademark Registration in India

A single entity could have separate segments or undertakings with its own set of assets and liabilities each focused on a different business. Therefore, when the need arises, the entity can sell off a segment or the undertaking. This is called a slump sale.

 

CONTENTS

1. Slump Sale under Income Tax
2. Tax Effect in a Slump Sale
3. Slump sale vs. Itemised sale
4. Case study
5. Other matters
6. Slump Sale under Income Tax

​A slump sale for income tax purposes would be one where an undertaking is sold without considering the individual values of the assets or liabilities contained within the undertaking.

It may be important to note here that finding out individual values may be of relevance only for the purpose of determining stamp duty or any other similar taxes. 

(Applicable in case of Land & Building transferred along with the respective undertaking)

 Tax Effect in a Slump Sale

The gain or loss resulting out of a slump sale shall be a Capital Gain/Loss under the Income Tax Act.

 (In the hands of the seller)

The computation has been prescribed as follows:

the capital gain or loss as computed above will be either long-term or short-term depending upon the period for which the undertaking is held.

If the undertaking is held for more than 36 months, the resulting capital gain or loss shall be long-term and if it is held for less than 36 months, the resulting capital gain or loss shall be short-term.

Further, there will be no indexation benefit available in the computation of the capital gains.

Net worth: In computing the net worth of the entity, the following points need to be considered:

The value of net worth should not take into account any change in the value of the asset or liability resulting from the revaluation of such asset or liability.

In case of depreciable assets under the Income Tax Act, the Written Down Value of such assets as per the Act shall be considered.

In the case of assets on which 100% deduction has been allowed u/s 35AD (specified business), the value of such assets will not be considered.

More info :  Trademark Registration in India

Virtual CFO Services | Startup India Registration Online

Presently, after the eruption of the pandemic worldwide, new companies and corporates are searching for approaches to run lean. There is stress in a lot of industries and even established promoters now want to slice out high costs associated with their senior management to maintain good profitability.

This condemns us all to rethink and derive new solutions wherein innovative and remote capabilities can serve the purpose of the appraisal, decision-making, and efficient use of man-hours in senior management roles.

As a result of the above, a new pattern of employing Virtual CFOs over the more conventional in-house full-time CFOs is now being adopted at an exponential rate.

Get More Info : Corporate Restructuring Strategies

Websites : https://www.setupservicesindia.com/

Contact Us : Company Startup Registration Services