TaxTMI 
TaxTMI 
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 ?
Conversion of Proprietorship firm into Pvt. company
24 Feb 2012 
3 Replies 
10982 Views Asked by
Ongoing concern principle preserves tax continuity on conversion to private company if succession conditions and shareholding continuity are met.
Conversion of a sole proprietorship into a private company is treated as succession of business; under the ongoing concern principle it ordinarily does not create VAT liability and, for income-tax, may be a transaction not regarded as transfer if all assets and liabilities vest in the company, the transferor's shareholding meets required continuity thresholds and the transferor receives no consideration except shares. (AI Summary)
Conversion of a sole proprietorship into a private company is treated as succession of business; under the ongoing concern principle it ordinarily does not create VAT liability and, for income-tax, may be a transaction not regarded as transfer if all assets and liabilities vest in the company, the transferor's shareholding meets required continuity thresholds and the transferor receives no consideration except shares. (AI Summary)