There are four individuals, for say mr raju, mr shyam & me mr vivek. in my nearby town/ village we have 3 adjacent land . now we three would like to come together and develop the said land together after amalgamating the lands of all 3 . we are planning to form and aop or boi . what are the recommendation and possible issues in the creation and execution of the same. Few of the many queries are as follows: * can it be done and despite on the land records it would be shown as three different lands in the name of we above three individuals, but as the land now is a part of the app/ boi , any sale from the prospective project to be developed on the said land can it be collected in the name of aop & respective income tax be paid. what are the other possible issues which can arise in the collection and payment of any direct or indirect tax, duty etc ? what precaution needs to be taken?
- You can form either BOI or partnership and can pool the land in the name of BOI it firm as capital contribution. You will be liable to pay income tax and GST.
- Under GST, liability would depend on the further activity i.e. residential or commercial.
- Income tax is an annual liabilty.
Dear Sir,
Hope you are doing well !!
It is advisable to take a phone consultation for detailed discussion.
Hello,
Yes, you can form a different entity and pull your individual asset as part of the capital contribution. Such transfer of asset as a capital contribution for becoming a member of any AOP/BOI would be taxable under sec. 45(3).
Further, on the sale of the developed property, Income Tax and GST would be levied to the AOP/BOI/Partnership Firm formed.
I hope that this answer satisfies your requirements.
Regards,
CA Hunny Badlani
I would advice you to go for a partnership firm as the income tax rate for AOP/ BOI would be more or less same as partnership whereas it can be even more some times.
Also partnership firm is a more used type of organisation and it has proper paper work and everything.
No you have to first transfer such land as capital of partnership firm and show it as its property.
Hope you find the information helpful if you do please rate it 5 and provide your valuable feedback for my improvement.
Thank you.
