India’s apex body for direct taxes has proposed new rules for bringing the value of unquoted shares on a par with the fair market value of underlying assets, seeking to prevent tax avoidance by firms that use the historical acquisition cost to set the price of unlisted stock. The Finance Act, 2017, inserted a new section to the Income tax Act on the valuation of unquoted shares — those not listed on any exchange — at fair market value for computing capital gains tax. It had also introduced new provisions to expand the scope of taxation of any gift or property received for inadequate consideration. The Central Board of Direct Taxes on Friday released draft rules prescribing the method of valuation of any such property, jewellery, artistic work, immovable property, or shares and securities. Stakeholders have until May 19 to provide their comments. According to the draft rules, the “net asset book value” method is proposed to be adopted for the valuation of shares. Fo...
Pre IPO | Private Equity | Unlisted Shares