Queries about company strike off and loan waiver

1) Whether the strike-off approach with loan waiver is fine?
Yes, the approach is generally acceptable provided the company extinguishes all liabilities in compliance with Section 248(2) of the Companies Act and maintains proper documentation for the waiver.

2) Whether the director loan waiver becomes taxable income?
Taxability depends on the nature of loan utilisation. Waiver of loans used for capital purposes is generally treated as a capital receipt, whereas waiver relating to trading/revenue liabilities may be taxable under Section 41(1).

3) Can the company close its bank account now?
Yes, the bank account may be closed after settling expenses and statutory obligations. From a practical standpoint, closure after filing the relevant ITR is preferable.

4) Which account should the remaining bank balance be transferred to?
The balance should be utilised for legitimate expenses or settled through properly documented reimbursements/repayments. Unsubstantiated transfers should be avoided.

5) What to consider while preparing the final nil balance sheet?
Ensure accurate reflection of nil assets and liabilities, correct accounting treatment of the waiver, no pending statutory dues, and consistency with regulatory filings.

1) Whether the strike-off approach with loan waiver is fine?
Yes, the approach is generally acceptable provided the company complies with Section 248(2) of the Companies Act and validly extinguishes all liabilities with proper supporting documentation.

2) Whether the director loan waiver becomes taxable income?
Taxability depends on loan utilisation. Waiver of loans used for capital purposes is generally treated as a capital receipt, whereas waiver relating to trading/revenue liabilities may be taxable under Section 41(1).

3) Can the company close its bank account now?
Yes, the bank account may be closed after settling legitimate expenses and statutory matters. Practically, closure after filing the relevant ITR is advisable.

4) Which account should the remaining bank balance be transferred to?
The balance should be utilised for genuine expenses or settled through properly documented reimbursements/repayments. Arbitrary transfers should be avoided.

5) What to consider while preparing the final nil balance sheet?
Ensure nil assets and liabilities, correct accounting treatment of the waiver, no pending statutory dues, and consistency with compliance filings.

6) Can issues arise from authorities post strike-off?
Yes, issues may arise if compliance, accounting treatment, or waiver classification is improper. Proper documentation and accurate reporting mitigate such risks.

1. Not possible. If bank has balance (asset), balance sheet can’t be fully zero—there must be a matching credit (equity/P&L/payable).

2. No, don’t withdraw just to force NIL. Use the bank balance for genuine closure expenses and/or close the account when not needed to avoid MAB charges.

3. Yes, you can file ITR with a closed bank a/c. If no refund is expected, it’s fine to report the closed account details.

4. Yes, correct for DPT-3 (post waiver): Opening ₹22L → “Other adjustment” ₹22L → Closing ₹0 (with waiver docs + board resolution + entries).