—Guide
Selling Your Business in India: Share Sale vs Slump Sale vs Asset Sale
How the three main ways of selling a business in India compare for the seller — tax, liabilities, complexity — and how to decide which suits you.
When selling a business in India, how the sale is structured can matter as much as the price. The three main options — selling shares, selling the business as a going concern, or selling specific assets — have different tax results and risks. This guide compares them from the seller's side.
Share Sale
The owners sell their shares in the company. The company itself, with its assets, contracts and liabilities, carries on under new ownership.
- Tax: capital gains on the shares, at rates depending on holding period and whether the shares are listed.
- Liabilities: stay with the company — which is why buyers seek warranties and indemnities.
- Complexity: usually the simplest, since contracts and licences stay with the company.
Slump Sale
The company sells its business, or an undertaking, as a going concern for a lump sum, without separate values for individual assets.
- Tax: the company is taxed on the gain under specific rules for slump sales, with the gain computed on the net worth of the undertaking and a fair market value floor.
- Liabilities: can largely stay with the seller company.
- Complexity: contracts, licences, employees and registrations must be transferred.
- The owners then need to take proceeds out of the company, which may be taxed again.
Asset Sale
The company sells specific assets — equipment, a brand, IP — rather than the whole business.
- Tax: taxed on each asset according to its nature.
- Liabilities: stay with the seller.
- Complexity: depends on the assets.
Choosing a Structure
- Sellers usually prefer share sales for simplicity and a single layer of tax.
- Buyers often prefer business or asset transfers to leave liabilities behind.
- The final structure is negotiated, often with price adjustments reflecting who bears which risks.
Other Considerations
- Stamp duty differs by structure and state.
- GST can apply to asset transfers, while transfers of a going concern may be treated differently.
- Foreign buyers bring FEMA pricing and reporting rules.
Getting Help
Think Filing models sale structures for business owners and supports them through diligence and closing.