Valuation under Income Tax Act, 1961
Rule 11UA of the Income Tax prescribes the valuation methodology for determining the FMV of various types of assets (including unquoted equity shares), not only for the purposes of the angel tax provision but also for other anti-abuse provisions involving transfer of assets without consideration or at a value less than the FMV. Assesses can choose any method for valuation of share as per rule 11UA(2).
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Read MoreA detailed analysis of your case will be done by an experienced valuer.
A detailed analysis of your case will be done by an experienced valuer.
Read MoreYou will be able to track your case with a personal account.
You will be able to track your case with a personal account.
Read MoreThe concept of “Angel Tax”, first introduced by the Finance Act of 2012, has now been around for more than a decade. The intention behind the enactment of section 56(2)(viib) of the Income Tax Act, 1961 was to deter the creation of shell firms and to prevent the circulation of black money through the subscription of shares of closely held companies at unreasonable high valuation. In the company, share capital is the capital receipt, not liable for tax. However, if revenue receipt, in the grab of share capital, is introduced in the company that needs to be taxed.. This section treats any excess over market value as liable to tax, treating it akin to a revenue transaction. Angel tax provision (56(2)(viib)) were applicable on assesses, not being a company in which the public are substantially interested, receiving the consideration on the issue of shares that exceeds the face value of such shares. The aggregate consideration received for such shares as exceeds the fair market value of the shares so issued is subject to tax.
