Taxation of share premium: excess consideration on closely held company share issues treated by reference to fair market value.

A new clause (viib) in section 56 treats, for a company not substantially publicly held, the aggregate consideration received on issue of shares from a resident to the extent it exceeds the shares' fair market value as relevant for tax; exclusions cover consideration received by a venture capital undertaking from specified venture capital entities and by companies from notified classes. Fair market value is determined by a prescribed method or by company substantiation to the Assessing Officer based on the value of assets, including specified intangible assets, on the date of issue.

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