1. Board Resolution and Internal Approvals Are Mandatory
When a company owns land, it cannot be sold by a single individual without proper authorization. The process requires:
- A Board Resolution approving the sale of the property
- Shareholder approval in case the land sale constitutes a significant portion of the company’s assets (as per Section 180 of the Companies Act, 2013)
- Documentation authorizing specific directors or officers to execute sale deeds and agreements
This adds a layer of corporate governance and procedural formalities to the transaction.
2. Due Diligence Includes Corporate and Regulatory Verifications
Buyers conducting due diligence must verify:
- Company registration details, Memorandum & Articles of Association (MoA & AoA)
- Whether the company has the legal power to hold and sell immovable property
- The land’s inclusion in the balance sheet as a fixed asset and whether any charges or mortgages are registered
These checks are necessary to ensure that the sale is valid, authorized, and free from encumbrances.
3. Execution by Authorized Signatories
Unlike individual sales, a company land sale is executed through:
- Authorized signatories acting on behalf of the company
- Documents signed under the common seal (if applicable) or in accordance with the company’s delegation matrix
- Inclusion of the CIN (Corporate Identity Number) and details of the resolution in sale documents
This ensures legal enforceability and recognition by registering authorities.
4. Taxation Differs Based on Corporate Tax Rules
For companies, capital gains from land sales are taxed under corporate income tax provisions, which may include:
- Tax at 22% to 30% depending on turnover, plus surcharge and cess
- Indexation benefits if the land is treated as a long-term capital asset
- Applicability of MAT (Minimum Alternate Tax) in certain cases
Companies are also not eligible for Section 54F exemptions, unlike individuals.
5. GST and TDS Compliance Requirements
If the land being sold is part of the stock-in-trade or part of a real estate development business, GST may be applicable. In addition:
- TDS at 1% under Section 194-IA still applies if the buyer is an individual and the consideration exceeds ₹50 lakh
- Companies as sellers must report income, issue proper invoices, and ensure GST, if applicable, is accounted and paid
- TDS under Section 194Q may apply if the buyer is a company purchasing from another company
These compliance aspects require professional accounting and legal review.
6. Stamp Duty and Documentation Nuances
While stamp duty is largely the same, documentation for company-owned land includes:
- Certified copies of board resolutions
- Notarized authorization letters and KYC documents of directors
- Mention of company PAN, address, and corporate identifiers
Some states may require additional declarations or disclosures for corporate entities.
7. Buyer’s Risk Analysis Is More Extensive
Buyers purchasing from companies often assess:
- Pending litigations, insolvency status, or restructuring plans
- Whether the land is subject to debts, arbitration, or legal encumbrances
- If the company is under NCLT proceedings or has filed with ROC (Registrar of Companies) regarding asset disposal
This makes legal and financial due diligence more complex and detailed than individual land sales.
