TaxTMI 
TaxTMI 
TaxTMI 
BUDGET 2012
Income from other sources
Taxation of consideration for issue of shares in excess of FMV
• Where a company (in which public are not substantially interested) receives from a resident, consideration for issue of shares exceeding the face value, such consideration in excess of the FMV will be taxable.
FMV of shares to be higher of:
• value as per prescribed method; or
• value based on assets including intangible assets, on the date of issue of shares, as substantiated by the company to the satisfaction of the Revenue authorities.
This provision is not applicable to consideration for issue of shares received by VCU from a VCC or VCF.
Taxation of transactions without consideration or for inadequate consideration
• Presently, any sum or property, the aggregate value of which exceeds Rs. 50,000 in a year, received by an Individual or HUF without consideration is taxable in the hands of the Individual or HUF unless it is received from a “relative” as defined under the Income-tax Act.
The definition of the term “relative” has been amended to include members of the HUF.
The above amendment will be effective retrospectively from 1 October 2009.