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CS Professional · Goods and Services Tax (GST) and Corporate Tax Planning · Tax Planning and Business Restructuring

Under the slump sale provision of the Income-tax Act, 2025, profits or gains from a slump sale of an undertaking that the assessee has owned and held for more than thirty-six months are chargeable as:

The gain is chargeable as long-term capital gains. Section 77(1) treats slump sale profits as long-term, and only an undertaking held for thirty-six months or less is treated as short-term under sub-section (2). Holding it for more than thirty-six months keeps the gain long-term.

  1. AShort-term capital gains
  2. BLong-term capital gainsCorrect
  3. CBusiness income
  4. DIncome from other sources

Explanation

Section 77(1) makes profits or gains from a slump sale chargeable as long-term capital gains. Sub-section (2) turns them into short-term gains only where the undertaking was held for thirty-six months or less. Holding beyond thirty-six months therefore leaves the gain long-term.

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