Answers On Topic: Conversion of LLP
A Private limited is intending to convert into LLP , with same economic interest of share holder and partner . Will there be any capital gain tax in the hands of shareholder upon surrender of shares and getting capital in LLP.
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An LLP is proposed to be converted into a Pvt. Ltd. company. The said conversion is exempt u/s 47(xiii) in the hands of the firm. However no separate exemption is provided u/s 56(2)(x). Therefore, despite the economic interest of the shareholder (being the erstwhile partner) remains same in the Pvt. Ltd. Co. vis-a-vis LLP, would the shareholder be taxed u/s 56(2)(x). The Fair Value of equity shares received by the shareholder (as derived u/r 11UA less balance in the partner's capital account could be bought to tax u/s 56(2)(x). Further, the new Company is merged with another company whereby the…
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Taxability of Capital Gain on Conversion