The current burning news state that the Indian government has introduced a new chapter in the tax department. The insertion of clause X by the Finance Act 2017, in the subsection 2 of section 56 of the Income Tax Act of 1961 was necessary to widen the sphere of taxability for the sum of money or the property which were not correctly being reported. In furtherance of these policies, CBDT has introduced section 50CA to lay down norms for valuation of unquoted shares
If you read the rule 11 UA, you will notice that if a person possesses jewelries, artistic works or shares without consideration, then the fair market value of the product will be taken into account for computing taxable income under the clause. For the immovable properties, the stamp duty value will be taken into consideration under the rules of taxation.
As per CBDT laid down rules, the valuation of unquoted shares would be based on Actual Market value of the assets held by such Unlisted Company
Hitherto the assesees used to book these assets at a low value or do some in-house trading of the shares of such companies and thereafter the shares were valued at such artificially deflated prices. You must know if the aforementioned assets are received as the unquoted equity shares of the company then the book value will be taken into consideration to determine the value of the shares we have discussed.
In the Finance Act of 2017 the Indian government has inserted the section 50 CA which will be effective from 1st April, 2018, to consider the transfer of the unquoted equity shares of the company will face less Fair Market Value (FMV) and such FMV will be decided on the full value for computing based on the capital gains.