Opinion: Slump Sale V. Demerger
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- Last Updated on 20 December, 2021
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V. K. Subramani – [2021] 133 taxmann.com 126 (Article)
Analysis of slump sale and demerger provisions would show that their applicability is overlapping in some cases and mutually exclusive in certain other cases. Demerger is tax neutral whereas slump sale is taxable as short-term or long-term capital gain with eligibility for exemption for reinvestment under section 54EC. More spotlight needs to be given for demerger similar to conversion of firms in to companies or companies in to LLP besides making the legal requirement somewhat simple by delinking demergers from the provisions of the Companies Act,2013 wherever no public money or stake is involved to make business reorganisations become friendly for achieving the motto of ease of doing business in India.
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Dear Sir , its mentioned in your article that Slump sale can have benefit of 54 EC.
As per the amended provision FY 2019-20 onwards, if the taxpayer sells a long term capital asset being land or building or both, he/she can only claim capital gain exemption under Section 54EC on investment in long term specified assets.
The ITR Forms under long term capital gain of slump sale still shows the 54EC. Can you please confirm whether its eligible or not.