Earnings Tax Ramifications on Conversion of company into Pvt Ltd Business
Income Tax Implications on Conversion of company into Pvt. Ltd.
In addition of above kindly see the below mentioned other ramifications which might draw in the Income Tax provisions for succession of firm into Pvt. Ltd. Co.:–LRB-
1. Earnings under head Home Residential or commercial property:–LRB-
Any earnings or lease stemmed from home t/f to Pvt Ltd in a plan of conversion will be deemed to be the income from such home from the date when such conversion took place.
2. Earnings u/h Salaries
No pertinent requirements.
3. Earnings u/h Capital Gain & PGBP
- u/s 47:- Conversion of Company into Pvt. Ltd. business will not be regarded as transfer accordingly, no Capital Gains will be emerges subject to some exceptions u/s 47 A.
- Carry forward of losses & unabsorbed depreciation & AMT Credits:- Except the AMT Credit, all losses, unabsorbed depreciation and allowances shall be deemed to be the losses, unabsorbed devaluation and allowances of such Pvt Ltd business.
- u/s 32:- Depreciation shall be supplied on proportionate basis to firm and business on the basis of days owned such assets.
- Sec 44 AD/ 44 AE/ 44 ADA advantage is not readily available to Pvt Ltd Company.
5. Income u/h Other Sources
Any earnings emerging after date of conversion will be considered to be the earnings of company.
6. Evaluation angle
U/s 170 checked out with section 189: Two different evaluations shall be done i.e. separate evaluation of firm and business shall be done.
7. TDS Provisions
Any TDS deducted after date of conversion shall be claimed by such business and not by company, even if the TDS after conversion is subtracted of company.
8. Various associated
- PAN:– New PAN copy will be made of company
- TAN:– New TAN copy shall be made from business
9. Penalties & Recoveries
- Any conflict of any provision of the act after the date of conversion shall be penalized and recuperated from such business.
- Any conflict done by firm prior to the date of conversion and assessment of such company is done after the date of conversion, the assessment shall be made on firm & partners both, deeming that no conversion has actually been done by such firm.
CS Piyush Jain
Email ID:- cs.pj2016 @gmail. com
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