Business Transfer Agreement — Drafting for Sale of a Business
A business transfer agreement records the sale of a running business as a whole: assets, liabilities, staff, licences and goodwill. It decides how tax, GST and stamp duty apply. We draft it for your review, prepare the tax and GST filings, and coordinate with your advocate and auditor.
What it is
A business transfer agreement (BTA) is the contract by which one party sells an undertaking to another for a lump sum, as a going concern. The buyer takes over the business with its assets, liabilities, contracts and employees. It is the usual paper for a slump sale.
Here is how the law sees it. The Income-tax Act defines a slump sale as the transfer of one or more undertakings for a lump sum without values assigned to individual assets. If you assign values to each asset, it is an itemised sale and taxed very differently. The agreement must make the choice clear. We draft for your review. Where a company needs shareholder approval or the deal needs legal opinion, a qualified professional signs off.
Who it applies to
Owners selling a division or the whole business
Buyers taking over a going concern
Firms and companies restructuring
Why it matters
Word the price to match the tax
Claim the GST exemption properly
Name every liability you pass on
Documents required
About the seller
- PAN, incorporation or firm documents
- Balance sheet and tax returns for recent years
- Board resolution, or partners’ consent
About the business
- List of assets, stock and liabilities
- Licences, GST registration, Udyam and contracts
- Employee list with PF and ESIC details
About the buyer
- PAN and entity documents
- Funding proof and board approval
- Details of the new GST registration, if needed
How it works
Value the business and fix the structure
Agree on price, the date of transfer and which assets, liabilities and people move. A prior due diligence review helps the buyer and tells the seller what to disclose.
Draft the agreement and get it reviewed
We draft the BTA: transfer scope, price, conditions, employees, indemnities, non-compete and closing steps. Each side’s advocate reviews before signing.
Get approvals and pay stamp duty
A company selling the whole or substantially the whole undertaking needs a special resolution under Section 180(1)(a) of the Companies Act, 2013, with MGT-14 filed on the MCA V3 portal. Stamp duty is state-specific. In Haryana, e-stamp paper is generated against a GRN on the e-GRAS portal.
Close and complete the filings
On closing, we prepare the GST transfer of credit in Form ITC-02, the buyer’s new GST registration and the licence transfers. The seller then reports the gain in the income tax return.
Timelines
Tax holding period
MGT-14 filing
Form 3CEA
What happens if the agreement is weak
Tax cost goes up
GST leaks
Hidden liabilities pass over
Slump sale vs itemised sale
Which structure suits you? The two routes differ on tax, GST and paperwork.
| Point | Slump sale | Itemised sale |
|---|---|---|
| Price | One lump sum for the undertaking | Value assigned to each asset |
| Capital gain base | Net worth of the undertaking | Cost of each asset |
| Net worth certificate | Form 3CEA by a Chartered Accountant | Not required |
| GST | Going-concern exemption | GST on movable assets sold separately |
The Income-tax Act 2025 applies from 1 April 2026 and renumbers sections. The substance of these slump sale rules carries over, and we use the section numbers that apply to your tax year.
Frequently asked questions
What is a business transfer agreement?
It is a written contract for selling a running business as a whole. The buyer takes over the assets, liabilities, staff, licences and contracts, for a lump-sum price. It is the standard document for a slump sale. We draft it for your review, then your advocate checks it before signing.
Is a business transfer the same as a slump sale?
Usually yes. A slump sale is the transfer of one or more undertakings for a lump sum, without values assigned to individual assets. A business transfer agreement is the contract that records it. If values are allotted to each asset, the deal reads as an itemised sale instead, with different tax. The wording decides, so we draft it carefully.
How is a slump sale taxed?
The gain is the price minus the net worth of the undertaking. If the business was held for more than 36 months, it is long-term and taxed at 12.5% from 23 July 2024. Otherwise it is short-term. A Chartered Accountant certifies the net worth in Form 3CEA. We prepare the working and your CA signs the certificate.
Is GST payable on a business transfer?
Generally no. Services by way of transfer of a going concern are exempt under Notification No. 12/2017-Central Tax (Rate), and Schedule II, para 4(c) keeps the asset transfer outside GST on goods. The business must be capable of running independently. We check this before closing so your exemption holds.
Can unused GST credit move to the buyer?
Yes, in a transfer of business, the seller can move unused input tax credit to the buyer under Section 18(3) of the CGST Act and Rule 41. It uses Form GST ITC-02 and only the credit in the electronic credit ledger moves, not cash. The buyer needs its own registration. We prepare and file the form.
Do shareholders need to approve the sale?
If a company sells the whole or substantially the whole undertaking, Section 180(1)(a) of the Companies Act, 2013 needs a special resolution. File MGT-14 with the Registrar within 30 days. A partnership needs partners’ consent as the deed provides. We draft the notice, the resolution and the form for you.
Who pays stamp duty on a business transfer?
Stamp duty depends on the state and on what is transferred, especially land. The agreement says who bears it, often the buyer. In Haryana, e-stamp paper is generated against a GRN on the e-GRAS portal. An unstamped agreement can be refused as evidence until duty and penalty are paid. We confirm the duty before signing.
Do employees move automatically?
No. Employees need new appointment letters or their written consent, and you must handle their PF and ESIC accounts on the transfer. The BTA should record which dues the buyer takes over. We draft the employee clauses and the transfer filings, and your advocate checks the labour position.
What it costs
Our fee plus the government fee that applies to your case, quoted before you commit. Tell us the situation and we will price it exactly.
Ready to begin?
Tell us what you are selling, the price and the closing date. We will draft the agreement and map the tax, GST and company filings around it.