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of <h1>Section 47(xiiib) exempts unlisted company to LLP conversions from capital gains tax if strict conditions are met.</h1> Section 47(xiiib) of the Income Tax Act addresses the conversion of an unlisted company into a Limited Liability Partnership (LLP), specifying that such a conversion is not considered a transfer for capital gains purposes. For this provision to apply, several conditions must be met: all company assets and liabilities must transfer to the LLP; shareholders must become LLP partners with equivalent capital contributions and profit-sharing ratios; no consideration other than LLP profit share and capital contribution is received; shareholders must maintain at least a 50% profit-sharing ratio for five years; the company's turnover must not exceed 60 lakhs, and asset value must not exceed 5 crore in the three preceding years; and no accumulated profit is distributed to partners for three years post-conversion.
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