TaxTMI 
TaxTMI 
Inviting comments on the draft rule 11UA for implementing the amendment made by the Finance Act, 2023
X X X X Extracts X X X X
X X X X Extracts X X X X
....bstantially interested, receives, in any previous year, from any person being a resident, any consideration for issue of shares that exceeds the fair market value of the shares, it shall be chargeable to income-tax under the head 'Income from other sources'. Rule 11UA of the Income-tax Rules, 1962 (the Rules) provides the method for computation of the fair market value of unquoted equity shares for the purposes of the Clause (viib) of sub-section (2) of section 56 of the Act. 2. In the Finance Act, 2023, an amendment was introduced in this provision to bring the consideration received from non-residents within the ambit of Clause (viib) of sub-section (2) of section 56 of the Income-tax Act, 1961. 3. As a result of the above a....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... "(2) Notwithstanding anything contained in sub-clause (b) of clause (c) of sub-rule (1), the fair market value of unquoted equity shares for the purposes of sub-clause (i) of clause (a) of the Explanation to clause (viib) of sub-section (2) of section 56 shall be the value, on the valuation date, of such unquoted equity shares as determined in the following manner :- (i) under clause (a) or clause (b) or clause(c) or clause (e), at the option of the assessee, where the consideration received by the assessee is from a resident ; and (ii) under clause (a) , clause (b) ,clause (c), clause (d) or clause (e) at the option of the assessee, where the consideration received by the assessee is from a non-resident, namely:- ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ained liabilities; (vi) any amount representing contingent liabilities other than arrears of dividends payable in respect of cumulative preference shares; PE = total amount of paid up equity share capital as shown in the balance-sheet; PV = the paid up value of such equity shares; or (b) the fair market value of the unquoted equity shares determined by a merchant banker as per the Discounted Free Cash Flow method. (c) where any consideration is received by a venture capital undertaking for issue of shares, from a venture capital fund or a venture capital company or a specified fund, the price of the equity shares corresponding to such consideration may, at the option of such undertaki....
X X X X Extracts X X X X
X X X X Extracts X X X X
....; (v) Replacement Cost Methods; (e) where any consideration is received by a company for issue of shares, from any entity notified under clause (ii) of the first proviso to clause (viib) of subsection (2) of section 56, the price of the equity shares corresponding to such consideration may, at the option of such company, be taken as the fair market value of the equity shares to the extent the consideration from such fair market value does not exceed the aggregate consideration that is received from the notified entity: Provided that the consideration has been received by the company from the entity notified under clause (ii) of the first proviso to clause (viib) of subsection (2) of section 56, within a period of ....