Redemption of Preference share
This query is : Resolved
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
10 November 2010
No Tax Implications if both issue and redemption is done at same value.
10 November 2010
Agreed
11 November 2010
but what about Sec 56(viia.
How should I Compute Preference share Fair Market Value
How should I Compute Preference share Fair Market Value
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.
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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