Section 11 UA of Income Tax Rules (Valuation of un-quoted shares)

Purpose

Similar to quoted shares, when a investor in un-quoted shares wants to sell her / his investment, they shall need to pay capital gain taxes on the difference between cost of acquisition (indexation if applicable) and sales consideration. 

Important consideration here is to check is sales consideration recorded is greater than or equal to “Fair Market Value” of the share as defined under section 11 UA of Income Tax Rules. 

Applicability

Rule 11UA(1) is applicable in case of Section 56 of the IT Act for determine the fair market value of the property other than immovable property.

Whereas Rule 11UA(2) is applicable in case of Section 56(viib) (i.e. shares issued by the company at premium)

Link to the PPT: 

https://www.dropbox.com/s/pdbdcc9w67ow5cz/Section%2011%20UA%20of%20Income%20Tax%20Rule.pdf?dl=0

Link to the video: 

https://youtu.be/_JtQcEvRC54

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