Tax board notifies rules for unlisted equity shares

0
1178
LinkedIn
Facebook
Twitter
Whatsapp
Telegram
Copy link

The Central Board of Direct Taxes has introduced rules to determine the fair market value of unlisted equity shares through notification No. 52 of 2012. The valuation rules, which are now part of the Income Tax Rules, 1962, have been notified in relation to section 56(2)(viib) of the Income Tax Act, 1961, which was introduced earlier in 2012.

tax-board-notifies-rules-for-unlisted-equity-sharesAccording to this provision, when the shares of an unlisted company are issued to a resident at a price that is higher than the fair market value of the shares, the company will be taxed on the difference between the fair market value and the sale price.

The new valuation rules provide companies with the option to determine fair market value in accordance with the existing rules or the discounted free cash flow method. The discounted cash flow analysis, if used, must be conducted by a merchant banker or an accountant.

You must be a subscribersubscribersubscribersubscriber to read this content, please subscribesubscribesubscribesubscribe today.

For group subscribers, please click here to access.
Interested in group subscription? Please contact us.

你需要登录去解锁本文内容。欢迎注册账号。如果想阅读月刊所有文章,欢迎成为我们的订阅会员成为我们的订阅会员

已有集团订阅,可点击此处继续浏览。
如对集团订阅感兴趣,请联络我们

The legislative and regulatory update is compiled by Nishith Desai Associates, a Mumbai-based law firm. The authors can be contacted at nishith@nishithdesai.com. Readers should not act on the basis of this information without seeking professional legal advice.

LinkedIn
Facebook
Twitter
Whatsapp
Telegram
Copy link