Conversion of Proprietorship firm into Pvt. company

[PANKAJ GROVER]

In case, a Proprietorship firm registered under VAT at Delhi and Noida, gets itself converted into a Private Limited Company then what are the consequences of the same ? Also, is it attracts any liability on fixed assets and taxable goods ?

AI Summary

Converting a Proprietorship to Private Limited: Tax Implications and Section 47(xiv) Income Tax Act Considerations A discussion on converting a proprietorship firm into a private limited company raised questions about VAT and CST implications, especially concerning fixed assets and taxable goods. One response highlighted the 'On Going Concern' principle, indicating no tax would apply. Another referenced Section 47(xiv) of the Income Tax Act, explaining that if certain conditions are met-such as asset and liability transfer and maintaining a minimum shareholding-no income tax liability arises. A third response noted that while the business transfer means the company succeeds the proprietorship, VAT liability should not apply, though specific provisions need review.