TOPIC 35: QUICK REFERENCE TO “FAQ's on Slump Sale”

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Quick Reference to FAQ's on "Slump Sale" :-
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1. What is Slump Sale ?
∆ Transfer of Undertaking on a Lump sum Consideration.

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2. How Valuation of Slump Sale is to be done?
∆ it's not upon the Individual assets and liabilities. It's on Overall basis total Value.

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3. How it is different from Demerger?
∆ Demerger means segregation of Business in a Parts as per Companies Act, 2013. And Demerger results into reorganization of Capital.
Whereas,
Slump Sale is not governed by Companies Act, 2013. It does not lead into reorganization of Capital. There is no such issue of Shares.

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4. What is the legal Provision for Slump Sale ?
∆ Section 2(42C) of Income -tax Act 1961.

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5. What is taxability for Slump sale?
∆ The net amount of profit from transfer of Undertaking with respect to slump sale shall be taxable under the head ‘Capital Gains’.

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6. Whether Slump sale is a part of Corporate Restructuring ?
∆ Yes. Absolutely. It's a popular type of Corporate Restructuring.

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7. Any example for Slump sale ?
∆ If particular property has Furniture of ₹ 1 lakh, Goodwill ₹ 50 k, actual Value of that property ₹ 2 lakh, Creditors 30 k. etc. But at the time of Consideration it will sale for ₹ 5 lakh on Lump sum basis. Individual assets & liabilities calculation is not there.
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Regards
ACA SOURAV BAGARIA