# Slump Sale & Business Transfer

> A slump sale transfers a whole undertaking for a lump-sum price without assigning values to individual assets. Under Section 50B, the gain is the price (deemed at least fair market value) minus the undertaking's net worth; it is long-term if the undertaking was held for more than 36 months, taxed at 12.5% for transfers after 23 July 2024. Transfer of a business as a going concern is exempt from GST.

Practice: Mergers, Acquisitions & Restructuring — https://www.industax.com/services/mergers-acquisitions/

Slump sales are common for carving out a division to a new company or selling a business line. The business transfer agreement must move assets, liabilities, employees and contracts together for the undertaking to qualify.

We compute net worth and gains, check the fair market value rules, draft the transfer mechanics with counsel and handle GST and ITC transfer.

## Key facts

| Item | Detail |
| --- | --- |
| Provision | Section 50B |
| Gain | Consideration (≥ FMV) − net worth |
| Long-term | Undertaking held > 36 months; 12.5% |
| GST | Going-concern transfer exempt; ITC via ITC-02 |
| Report | Accountant's report on net worth |

## Who needs this

- Companies selling a division
- Groups reorganising businesses into new entities
- Buyers acquiring a business line

## What's included

- Tax computation
- Net worth report
- BTA tax review
- GST transfer

## Documents

- Undertaking balance sheet
- Asset and liability schedules
- Draft BTA

## Process

1. **Define** — Undertaking identified.
2. **Compute** — Net worth and tax.
3. **Transfer** — BTA executed; registrations moved.

## FAQs

### What is the difference between slump sale and itemised sale?

In a slump sale, a single price is paid for the undertaking without valuing individual assets; in an itemised sale, each asset is priced and taxed separately (e.g. depreciation recapture, separate capital gains).

### Is indexation available in a slump sale?

No. Section 50B does not allow indexation.

### Do employees transfer automatically?

Employees transfer with the undertaking on terms no less favourable, typically with their consent and continuity of service for gratuity.

## Official sources

- incometaxindia.gov.in: https://www.incometaxindia.gov.in/

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Publisher: Indus Tax — CA-led tax and compliance firm (https://www.industax.com). Contact: info@industax.com, 9059139258.
This is general information, not advice for your specific facts.