Section 50B- Slump Sale
- Slump sale means assessee transfer the one or more undertaking / division for lumpsum consideration with out assigning value/ selling price of individual asset.
- Here cost of acquisition is of undertaking is Net worth of the undertaking.
- The benefit of Indexation is not available under this section of Slump sale.
Computation of Capital Gain Under Slump sale
| Particular | Amount |
| Full value of consideration ( FMV as per rule no.11UAE) | XXX |
| Less: Transfer Expenses | (XXX) |
| Net Consideration | XXX |
| Less: Cost of Acquisition (Net worth of Undertaking) | (XXX) |
| Short Term Capital Gain/ Long term Capital Gain | XXX |
Computation of Net-Worth
| Particulars | Amount |
| Assets | |
| Depreciable Assets | Written Down Value as per income tax |
| Add: Other Assets | Book value |
| Less: Liabilities | Book value |
| Net worth | xxx |
Nature of capital gain
- If undertaking held for mora than 3 years then capital gain levy as a Long term Capital Gain.
- If undertaking held for 3 years or less then, capital gain levy as Short Term Capital Gain.
CA report submission
In the case of slump sale , assessee shall furnish a report in the Form 3CEA of an CA up to date of referred to in section 44AB indicating the computation of the net worth of the undertaking or division, as the case may be , and certifying that the net worth of undertaking or division, has been correctly arrived.
Important Notes
- Revaluation of asset shall be be ignored for the computation of Net worth of undertaking.
- If net worth comes negative then, cost of acquisition is Nil.
- No profit under profit or gain form business or profession shall arise if stock is transferred in slump sale.
- For computing net worth, if asset on which was claimed deduction u/s 35AD is transferred, then value shall be taken as NIL.
- For computing Net- worth, value o self generated goodwill of business or profession is taken as NIL.
- Fair market value of the capital assets as on the date of transfer, calculated as pe rule 11UAE (Given in valuation rules topic) shall be deemed to be the full value of the consideration received or accruing as result of the transfer of such capital asset.
- Tax savvy restructuring plans to avoid Slump Sale tax if transferee is Indian company
>>> Transfer undertaking after acquiring 100% shares of transferee to not attract capital gain [Section 47(iv)]
>>> Transfer undertaking by way of demerge rather than Slump Sale [Section 47(vib)]
