Redemption of Preference share

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shanky budhiraja (Querist)
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10 November 2010 Please tell me Whether there will be any Tax Impliaction if Prefernce share redeemed by company which is issued to one of the group of company at the par now also reddemed at par

Rasesh

Rasesh (Expert)
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10 November 2010 No Tax Implications if both issue and redemption is done at same value.

taxindiaconnect

taxindiaconnect (Expert)
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10 November 2010 Agreed

shanky budhiraja

shanky budhiraja (Querist)
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11 November 2010 but what about Sec 56(viia.

How should I Compute Preference share Fair Market Value

Aashok Kumar Sharma online

Aashok Kumar Sharma online

(Expert)
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20 July 2025 How to Compute Fair Market Value (FMV) of Preference Shares
For unlisted shares, the FMV is generally computed based on:
Book value method (Net asset value method) — based on balance sheet figures, adjusted for intangible assets, liabilities, etc.
Discounted Cash Flow (DCF) method or
Valuation report by a Chartered Accountant or Registered Valuer.
The CBDT also issues guidelines for valuation of unquoted shares.
For preference shares, FMV is calculated based on:
Face value,
Dividend rate,
Redemption terms (period and amount),
Current market conditions.
Many companies engage a registered valuer to prepare a valuation report for FMV.

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