Income tax implication on sell of LLP

[Sanjay Lunia]

I am having LLP in which I have under construction property.

If I sell the LLP either to company or Individuals then who is liable to pay taxes?

As per my understanding it is partner who is liable to pay tax.

Tax would be capital gain either short term or long term depends on number of months of holding (if more than 24 months then long term else short term)

Rate of tax would be 12.5% in case of Long term and slab rate in case of short term.

I request the member, please either confirm or enlighten my understanding.

Thank you for your support and advice.

[FCA Adv amit aggarwal]

if LLP (with assets and liabilities) is transfer to company then LLP shall have to pay tax.

in such a case TDS can came in picture but it depends upon buyer is domestic/ foreign company and LLP is registered in India or foreign

best way to save tax under capital gain- first convert LLP to pvt company (all partner shall be shareholder) then amalgamated to another company. if all conditions fulfilled then prov 47 (vi) will be applied - no tax liability will arise

AI Summary

Transfer of LLP assets and liabilities may trigger tax and TDS, while conversion and amalgamation can support capital gains exemption.
Transfer of an LLP together with its assets and liabilities to a company may attract tax in the hands of the LLP, and TDS may also come into play depending on whether the buyer is a domestic or foreign company and whether the LLP is Indian or foreign. A suggested tax-efficient route is to convert the LLP into a private limited company, with all partners becoming shareholders, and then amalgamate it with another company; if the prescribed conditions are satisfied, proviso to section 47(vi) may apply so that no tax liability arises.