Slump Sale - Valuation Rule​

As per section 2(42C) of the Income-tax Act 1961, ‘slump sale’ means the transfer of one or more undertakings as a result of the sale for a lump sum consideration without values being assigned to the individual assets and liabilities in such sales.

In simple words Slump sale’ is nothing but the transfer of a whole or part of a business concern as a going concern; lock, stock and barrel.

‘Undertaking’ has the same meaning as in Explanation 1 to section 2(19AA) defining ‘demerger’. As per Explanation 1 to section 2(19AA), ‘undertaking’ shall include any part of an undertaking or a unit or division of an undertaking or a business activity taken as a whole, but does not include individual assets or liabilities or any combination thereof not constituting a business activity.

What is the Slump sale valuation rule?
In terms of the requirement of sec. 50B(2) of the Income Tax Act, 1961 (the “Act”), the Central Board of Direct Taxes (CBDT) vide Notification No. 68/2021 dated May 24, 2021, inserted Rule 11UAE in the Income Tax Rules, 1962 (the “Rules”). 

Prepared by:
CS RANJIT KEJRIWAL
FCS & REGISTERED VALUER (SFA)
FOR PRIVATE CIRCULATION ONLY