CBDT issues draft rules on valuation of unquoted equity shares, invites comments

New Delhi, May 6 (KNN) The Central Board of Direct Taxes (CBDT) released the draft plan for determining  the ‘fair market valuation’ (FMV) of the unquoted shares.

Under the existing rules, in case someone receives shares, securities, jewellery, artistic work, Fair Market Valuation of the same is considered for calculating taxable income. Likewise for property items that are stationery, the stamp duty value is counted for calculating taxability.

However, when these assets are received as the underlying assets of ‘unquoted equity share’ fair market Valuation or the stamp duty is not taken into consideration, rather it’s the book value that is counted for calculating the value of such shares.

Earlier, in April CBDT inserted a new section that said that where consideration for transfer of unquoted equity share of a company is less than the FMV of such share determined in accordance with the prescribed manner, the FMV shall be deemed to be the full value of consideration for calculation of income under the “Capital Gains” head”.

In this regard, CBDT has proposed to amend the rules for arriving at the FMV of unquoted shares by considering the FMV value of jewellery, artistic work, shares and securities and stamp duty in case of stationary property and book value for the rest of the assets

CBDT has invited comments and suggestions on the proposed draft by May 19^th (With inputs from PIB) (KNN/ DA)