Bringing the non-resident investors within the ambit of section 56(2)(viib) to eliminate the possibility of tax avoidance

Inclusion of non-resident investors in tax on share premium to curb premium-based tax avoidance schemes.

The Finance Bill proposes removing the residency limitation in the tax on excess consideration for issue of shares so that consideration received from non-resident investors will also be chargeable where aggregate consideration exceeds the fair market value computed under the existing FMV formula for unquoted equity shares; the amendment is effective from the first day of April following enactment and applies to the corresponding assessment year and subsequent years.