Tax Due Diligence & Transaction Structuring
Comprehensive tax due diligence for M&A transactions — identifying historic liabilities, structuring capital gains, and advising on slump sale vs share sale vs demerger for optimal tax outcomes.
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200+ M&A
Tax due diligence engagements
Direct + GST
Full-spectrum DD coverage
Pre-Transaction
Structuring advisory
ITAT Tested
Structuring positions
What is Tax Due Diligence?
Tax due diligence is an independent review of a target company's tax compliance position — conducted before an acquisition, merger, or investment. It identifies historic tax demands, contingent liabilities, undisclosed exposures, and compliance gaps across direct tax (Income Tax), indirect tax (GST), TDS/TCS, and regulatory matters.
In a share sale, the buyer assumes all historic tax liabilities of the target — undisclosed demands become the buyer's problem after closing. A thorough tax DD protects the buyer with accurate representations, warranties, and indemnifications in the SPA.
The choice of deal structure — share purchase vs slump sale vs itemised sale — has fundamentally different tax consequences. JCA models all three options and recommends the structure that minimises aggregate tax for both parties.
Share sale
Buyer assumes all historic liabilities — capital gains for seller at LTCG/STCG rates
Slump sale
Transfer of undertaking as a going concern — indexed cost of acquisition, Section 50B
Demerger
Section 2(19AA) — tax neutral if conditions met under Section 47(vib) and 47(vid)
ESOP perquisite
Taxed as salary on exercise; LTCG/STCG on sale of shares
Stamp duty
On share transfer: 0.015% of consideration (physical) / 0.015% (demat)
What JCA's Tax DD Covers
Historic Liability Identification
All pending income tax demands, GST show-cause notices, TDS defaults, and assessment orders identified with quantum and probability of crystallisation.
Full-Spectrum DD
Direct tax, GST, TDS/TCS, international tax (transfer pricing, PE), and regulatory compliance reviewed as a single integrated report.
Deal Structure Modelling
Tax modelling for share purchase vs slump sale vs itemised sale vs demerger — aggregate tax cost quantified for each option for both buyer and seller.
SPA / BTA Tax Clauses
Indemnification clauses, warranty language, and tax covenant drafting recommendations that appropriately allocate identified tax risks between buyer and seller.
Pre-Closing Structuring
Capital gains timing, LTCG indexation strategy, reinvestment planning, and pre-closing restructuring to minimise seller tax before the transaction closes.
ESOP Tax Planning
Perquisite valuation at exercise, LTCG/STCG analysis on share sale, and exit structuring for ESOP holders in private equity transactions and IPOs.
How We Conduct Tax Due Diligence
Systematic tax review — from data room setup to structuring recommendations and SPA clause drafting.
Scope & Data Room Setup
Agree DD scope (direct tax, GST, TDS, TP); request document list from target; access data room with last 6 years of tax records, notices, assessments.
Direct Tax Review
Examine ITRs, tax computations, assessment orders, pending demands, appeals; map contingent liabilities; review related party transactions and transfer pricing positions.
Indirect Tax (GST/TDS) Review
Review GST returns, ITC claims, audit orders, pending notices; TDS compliance across all sections; identify mismatches and defaults.
Quantification & Risk Assessment
Classify findings as confirmed, probable, and possible; quantify tax exposure for each; recommend SPA indemnification cover.
Report & Structuring Advisory
Deliver tax DD report; recommend deal structure (share sale / slump sale / demerger); draft key SPA tax representations and warranties.
Documents Required
Tax Records — 6 Years
- ITRs and tax computation sheets (last 6 AYs)
- Assessment orders, demand notices, and rectification applications
- Appeals filed before CIT(A), ITAT, and courts
- Form 26AS / AIS / TIS (all years)
- TDS returns (24Q, 26Q, 27Q) and Form 16/16A
Indirect Tax & Corporate
- GST returns (GSTR-1, GSTR-3B, GSTR-9) and any audit orders
- GST registration certificates and amendments
- Transfer pricing Form 3CEB and TP documentation
- Corporate agreements — shareholders agreement, related party contracts
- ESOP plan documents and grant/exercise/vesting schedules
Why Choose Juris Capital Advisory
for Tax Due Diligence?
Buy-Side & Sell-Side
JCA advises both buyers (DD and SPA protection) and sellers (pre-closing structuring and capital gains minimisation).
6-Year Deep Dive
Standard review covers 6 assessment years — going beyond the typical 3-year scope to catch time-barred but undisclosed demands.
Structure Modelling
Every engagement includes a tax-cost model for share sale, slump sale, and demerger — so the deal is structured for minimum total tax.
SPA Tax Expertise
Tax representation, warranty, and indemnification language crafted from an experienced tax practitioner — not a boilerplate checklist.
Deadline Driven
Tax DD delivered within agreed timelines — M&A deals have hard closing deadlines and we do not hold up the transaction.
Post-Closing Support
Tax positions identified in DD tracked post-closing — JCA supports the resolution of legacy exposures after acquisition.
What Our Clients Say
“JCA conducted the tax DD for our acquisition of a Chennai-based software company. They found a ₹34 lakh TDS default that was undisclosed. We renegotiated the SPA price accordingly and got an escrow holdback. Saved us significantly.”
Pradeep Venkataraman
CFO, Technology Acquirer, Bangalore
“We were selling our manufacturing unit. JCA modelled slump sale vs share sale and showed the slump sale route saved us ₹28 lakh in capital gains tax after indexation. The structuring advice alone was worth 10x the fee.”
Annamalai Krishnaswamy
Promoter, Manufacturing Company, Coimbatore
“Our PE fund acquired a healthcare company. JCA did the tax DD in 18 working days — direct tax, GST, and TDS — and flagged 3 pending GST demands that became SPA indemnities. Thorough and fast.”
Sridhar Balakrishnan
Partner, Private Equity Fund, Mumbai
Frequently Asked Questions
Know Every Tax Risk
Before You Sign the Deal
JCA's tax due diligence team reviews 6 years of target company tax records, models all deal structures, and drafts the SPA indemnification language — so you close with confidence, not contingent liability.