Income tax on shares issued at premium by a pvt ltd company
This query is : Resolved
22 October 2016
Dear Sir / Maam,
Can a Pvt Ltd Company issue its shares at Premium to Its directors , if yes, Whether the Premium amount will be taxable under Income tax act, 1956 ?.
Thanks and Regards
Rupinder Singh
Can a Pvt Ltd Company issue its shares at Premium to Its directors , if yes, Whether the Premium amount will be taxable under Income tax act, 1956 ?.
Thanks and Regards
Rupinder Singh
22 October 2016
Yes. Please see section 56(2)(viib) of the Income tax Act,1961.
23 October 2016
After Introduction of Section 56(2)(viib), this could be taxable if the share premium is excess of Fair Market Value. This section was introduced to prevent black money being converted into white. So If it is a genuine transaction, there could be no a problem as long as you can prove that the value including premium is FMV. There may be questions raised on the source of money on the Directors as well.
23 October 2016
Check this link also https://www.caquery.com/black-money/
23 October 2016
https://icaiahmedabad.com/TAXABILITY-UNDER-IFOS-UNDER-SECTION-56-2-vii-FINAL.pdf
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