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Jul 23, 2025
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First families of biz face higher tax on share sale profits
Indian promoters and several family offices using limited liability partnerships (LLPs) to own shares of companies, other securities, and invest in private equity and venture capital funds are in for a nasty surprise lurking in the new income tax (I-T) Bill.
Such LLPs, which have emerged as a convenient investment vehicle over last decade, will have to shell out more tax on their profits from sale of securities if the new Bill is enacted in its present form. The tax rate on profits from sale of shares or other investments could rise from 12.5%—the existing tax applicable for long-term capital gains—to 18.5% for these investment entities.
This looming tax arises with the proposed law widening the scope of the alternative minimum tax (AMT) on LLPs. AMT is aimed at collecting taxes from non-corporate taxpayers like individuals, Hindu undivided families (HUFs), and LLPs who claim significant deductions to lower their tax outgo.
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