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ARTICLE · 26 MAY 2023

CBDT Proposes Changes In Respect Of Angel Tax

King, Stubb & Kasiva
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The Central Board of Direct Taxes has recommended changes to Rule 11UA and has further decided to issue a separate notice of Excluded Entities with regards to "Angel Tax.

IndiaTax
Vatsal Gaur
Vatsal Gaur
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Introduction

The Central Board of Direct Taxes (CBDT) has recommended changes to Rule 11UA and has further decided to issue a separate notice of Excluded Entities1 with regards to "Angel Tax."2 The Finance Act of 20233 included consideration received from non-residents for issuing shares under section 56(2)(viib) of the Income-tax Act of 1961.4 This rule states that if the consideration for shares surpasses their Fair Market Value (FMV), the excess is taxable under the heading 'Income from other sources.' As a consequence of discussions with stakeholders following the amendment, the CBDT has proposed changes to Rule 11UA, which governs the valuation of shares under section 56(2)(viib).

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