take over of business

[RAM AVTAR]

what is the procedure of take over of registered proprietory business by registered privte limited company.  what will be treatement of vat credit carry forward

[CA Rachit Agarwal]

Income Tax Point of view

Transfer of assets/liabilities from proprietory concerns to private limited company would not atttract the capital gain provided the compliance is made for Section 47 clause (xiv).

 

VAT Point of View

The same differs from one State Law to other. As per general common rule VAT Registration Certificate is required to be cancealled and fress registration to be obtained. As regard the VAT credit in some states refund required to be claimed, while other simply make the amendment to the Registration Certificate and VAT credit is allowed.

AI Summary

Business transfer and tax registration: VAT credit treatment varies by state while capital transfer exemption may apply.
Transfer of a proprietorship to a private limited company can be tax neutral for income tax if statutory compliance secures a capital transfer exemption. VAT treatment is state dependent: generally the proprietorship's VAT registration must be cancelled and a new registration obtained for the company, while the treatment of carried forward VAT credit varies between refund claims and registration amendments as per State VAT law.