Succession of one firm by another firm
[Section-328 as per the Income Tax Act, 2025 (this Act) w.e.f. 1st April, 2026.]
Where a firm carrying on a business or profession is succeeded by another firm, except in a case covered by section 327, separate assessments shall be made on the predecessor firm and the successor firm as per the provisions of section 313.
FAQs on Section 328 of Income Tax Act 2025
What does Section 328 of the Income Tax Act, 2025 deal with?
Section 328 deals with the succession of one firm by another firm, where a business or profession carried on by a firm is succeeded by another firm, excluding cases covered under Section 327.
What happens to the assessment of the predecessor and successor firms under Section 328?
Separate assessments are made on the predecessor firm and the successor firm as per the provisions of Section 313.
Is Section 328 applicable in cases covered under Section 327?
No, Section 328 specifically excludes cases covered under Section 327.
What is the basis of assessment in case of succession from one firm to another under Section 328?
The basis of assessment is that each firm—the predecessor and the successor—is assessed separately in respect of their respective periods of operation.
From which date is Section 328 effective?
Section 328 is effective from 1st April, 2026.
Is Section 328 applicable only to businesses or also to professions?
Section 328 applies to both businesses and professions.
Does Section 328 provide any tax relief or exemption on succession?
No, Section 328 only governs the method of assessment during succession; it does not provide any relief or exemption.
Under Section 328, is there any requirement for approval or intimation to the tax authorities about the succession?
Section 328 does not explicitly state any requirement for approval or intimation, but general compliance and disclosures under other provisions may still apply.
Which section governs the manner in which separate assessments are made in the case of succession under Section 328?
The manner of making separate assessments is governed by Section 313.
Can Section 328 be invoked in case of conversion of a firm into a company?
No, such a case would generally fall under specific provisions dealing with conversion, not under Section 328.
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