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of <h1>X Ltd. Share Issue: No Tax on Shares Issued Below Fair Market Value as per Section 56(2)(viib) Income Tax Act.</h1> X Ltd., a closely held company, issued 1,000 shares to a resident at an issue price of 40 per share, with a face value of 10 and a fair market value of 42. Under Section 56(2)(viib) of the Income Tax Act, since the fair market value exceeds the issue price, no tax is applicable. However, if the fair market value were 31, the excess consideration of 9 per share would be taxable under the same section.
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