News Update

PLI scheme for electronics manufacturing sees incremental investment of Rs 8,390 CrG20 finance leaders agree to tax super-rich but forum not yet readyDPIIT promotes green logistics industry balancing economic growth and environmentIndia, US ink pact to stymie illegal trafficking of cultural propertyRailways expands tracks by 31,180 kmFroth in Yamuna river: Delhi complains to Centre against UP and HaryanaGovt to enhance reach of Indian Digital Public InfrastructureFormer BJP Minister says BJP has totally failed as Opposition in KarnatakaGovt provides incentives to small tea growersEU penalises 5 countries for infringing budget rulesI-T-Transaction involving transfer of unutilised shares cannot be deemed to be sale of shares so as to attract levy of Long Term Capital Gain u/s 112: ITATChina says Relations with Japan at critical stageST - Once the activity of appellant that is of forfeituring the amount of earnest money is not a declared service, question of retaining said money as consideration for rendering such service becomes absolutely redundant: CESTATEU medicines regulator disapproves Alzheimer’s new drugSC says no restrictions on voluntary name banners along Kanwar route eateriesFM favours debt reduction but sans affecting economic growthKargil Victory Day: PM warns Pak against practising terrorismChina pumps in subsidies worth USD 41 bn into car sectorMisc - Payments made to Government cannot be deemed to be a tax merely because statute provides for their recovery as arrears: SC CBMisc - Royalty not a tax; royalty is contractual consideration paid by mining lessee to lessor for enjoyment of mineral rights & liability to pay royalty arises out of contractual conditions of mining lease: SC CBMisc - Since power to tax mineral rights is provided for in Entry 50 of List II, Parliament cannot use its residuary powers in this subject matter: SC CBCus - Owner of goods has a liability to pay customs duty even after confiscated goods are redeemed on payment of fine - Interest follows: SC
 
CBDT notifies changes to Rule 11UA relating to ANGEL TAX

By TIOL News Service

NEW DELHI, SEP 27, 2023: THE Finance Act, 2023, brought in an amendment to bring the consideration received from non-residents for issue of shares by an unlisted company within the ambit of section 56(2)(viib) of the Income-tax Act, 1961(the Act), which provides that if such consideration for issue of shares exceeds the Fair Market Value (FMV) of the shares, it shall be chargeable to income-tax under the head 'Income from other sources'.

Keeping in line with the commitment of the Government to involve stakeholders in the drafting of the law, suggestions and feedback were invited from stakeholders and general public on the Draft Rule 11UA for valuation of methods for calculating the Fair Market price vide Press Release dated 19th May, 2023.

Taking into consideration the suggestions received in this regard and detailed interactions held with stakeholders, Rule 11UA for valuation of shares for the purposes of section 56(2)(viib) of the Act has been modified vide notification no. 81/2023 dated 25th September, 2023.

The key highlights of the changes in Rule 11 UA are:

a) In addition to the two methods for valuation of shares, namely, Discounted Cash Flow (DCF) and Net Asset Value (NAV) method, available to residents under Rule 11UA, five more valuation methods have been made available for non-resident investors, namely, Comparable Company Multiple Method, Probability Weighted Expected Return Method, Option Pricing Method, Milestone Analysis Method, Replacement Cost Method.

b) Where any consideration is received for issue of shares from any non-resident entity notified by the Central Govt., the price of the equity shares corresponding to such consideration may be taken as the FMV of the equity shares for resident and non-resident investors, subject to the following:

(i) To the extent the consideration from such FMV does not exceed the aggregate consideration that is received from the notified entity, and

(ii) The consideration has been received by the company from the notified entity within a period of ninety days before or after the date of issue of shares which are the subject matter of valuation.

c) On similar lines, price matching for resident and non-resident investors would be available with reference to investment by Venture Capital Funds or Specified Funds.

d) Valuation methods for calculating the FMV of Compulsorily Convertible Preference Shares(CCPS) have also been provided.

e) A safe harbor of 10% variation in value has been provided.

The notified Rule provides for expansion of the valuation methodologies to include globally accepted methodology and provide a broad parity to resident and non-resident investors.


POST YOUR COMMENTS
   

TIOL Tube Latest

Dr. Shailendra Kumar, Chairman, TIOL Knowledge Foundation, addressing the gathering



Shri Ram Nath Kovind, Hon'ble 14th President of India, addressing the gathering at TIOL Special Awards event.