If a Business Transfer / Slump Sale does not include immovable properties, but only good will and other movable assets, does Slump Sale proceeds (50B) be invested in 50EC or 54E or 54F. I want to know, if there are ways in which the Slump Sale proceeds can be invested to save the LTCG tax ?
How can Capital Gains from Slump Sale be invested to save LTCG tax?
In case of a slump sale, exemption from LTCG tax can be availed subject to sections 54F and 54EC of the Income Tax Act.
Upto what limit can this benefit be availed.
As per the recent budget announcement, the LTCG exemption will be capped at ₹10 crores.
This limit is applicable from FY 2023-24 onwards.
Thanks for your guidance. I have two more queries:
(1) If the payment for Slump Sale is done as deferred over a period of 3 years, the LTCG tax on the entire consideration amount has to be paid or it can be paid in a similar deferred period, as and when the payments are received?
(2) Under section 54F, if an investment is made for a part of the proceeds, how would be the benefit calculated?
If the payment for Slump Sale is done as deferred over a period of 3 years, the LTCG tax on the entire consideration amount has to be paid on the date of the transfer only, irrespective of when the payment is received.
You will get the benefit of the investment u/s 54F in the year of the purchase agreement.
I have found that in an amendment, Budget 2018 the government has proposed to amend the section 54EC by restricting its scope only to capital gains arising from long-term capital assets, being land or building or both.
Does that mean that the Capital Gain out of Slump Sale will not be eligible for 54EC benefits ?