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How to get money from reserves from Pvt ltd co.?

Started by Bhumin, February 03, 2012, 06:45:37 PM

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Dear All,

I have stake in pvt ltd co. i want to get money from reserves. ie want to free reserve without affecting tax liability of individual stakeholders.

Is it possible?

Expecting good suggestions from you.

Thanks  & Regards,
Bhumin A Mehta.


Dear Bhumin,

U can withdraw amount from Reserves by one or two methods:-
1) U can reduce your shareholding from less than 10 percent, then take advance from the company.

2) Secondly take loan from the present company and at the end of year declare divident in private company, but in this case loan taken by you will be added in individul income u/s 2(22)(e). This planning has limited scope and can be considered after taking care of your personal income also.

Thanks & Regards
CA Gaurav Goyal


Dear Gaurav Sir ,

Thank you for your prompt reply.

I have heard that there can be tax planning through
converting into LLP/buyback of shares/bonus/restructuring of companies
for utilization of reserves.

Is it  possible ?

waiting for your reply.

Thanks & Regards,
Bhumin Mehta.


you may issue bonus shares from reserves..so that no free reserves are there..and then take loan


Prepare a scheme of arrangement u/s 391-394 of Companies Act 1956 which may provide for converting reserves into debentures and get it approved by High Court.  Thereafter debentures can be redeemed by the company.