TaxTMI 
TaxTMI 
Capital Gains Taxation in Slump Sales: Clause 77 of the Income Tax Bill, 2025 vs. Section 50B of the Income Tax Act, 1961
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....lause 77 of the Income Tax Bill, 2025, introduces special provisions for the computation of capital gains in the event of a slump sale. A slump sale involves the transfer of one or more undertakings or divisions of a business as a going concern for a lump-sum consideration, without assigning individual values to the assets and liabilities. This clause aims to provide clarity on how capital gains f....
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....air valuation of transferred assets and the accurate determination of net worth. Detailed Analysis 1. Classification of Capital Gains Clause 77(1) stipulates that profits or gains from a slump sale are chargeable as long-term capital gains, provided the transferor has held the assets for more than 36 months. If the assets are held for 36 months or less, Clause 77(2) classifies the gains as shor....
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....arket value of the assets on the date of transfer shall be deemed the full value of consideration. This provision is crucial in cases where the lump-sum consideration does not reflect the market value of individual assets, ensuring that tax liabilities are based on realistic valuations. 4. Reporting Requirements Clause 77(4) and Section 50B(3) require the assessee to furnish a report from an acc....
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....ications for businesses engaging in slump sales. By providing a clear framework for computing capital gains, these provisions reduce the risk of disputes with tax authorities and ensure that businesses can accurately assess their tax liabilities. The requirement for an accountant's report adds a layer of verification, enhancing the credibility of the reported figures. Comparative Analysis Wh....