INCOME TAX
Sale/Transfer of Unquoted Shares – Get your valuation
right!
When an owner of Unquoted share ("Shares") in a
Company transfers the shares to any person, he is required to pay
Capital Gain tax on the difference between the sale consideration
received by him and the cost of acquisition of such shares (or the
inflation indexed cost, wherever applicable).
It is important to check if the "Sale consideration"
that he receives from the buyer is at least equal to or more than
the "Fair Market Value" ("FMV")as defined under
Rule 11UA of The Income Tax Rules, of the shares sought to be
transferred.
As defined under Rule 11UA, the fair market value of
unquoted equity shares shall be the value, on the
valuation date, of such unquoted equity shares as determined in the
following manner under (a) or (b), at the option of the
assessee, namely; -
