Share issue by unlised company
This query is : Resolved
25 March 2025
Hi All
If existing private company issue shares at face value (even though FMV is higher than FV), what are the income tax implications of the same in the hands of transferor and transferee?
Thanks in advance.
If existing private company issue shares at face value (even though FMV is higher than FV), what are the income tax implications of the same in the hands of transferor and transferee?
Thanks in advance.
25 March 2025
For transferor it may not be taxed if first issue, but for transferee the tax on difference value will be liable under sec. 56(2) IT act.
26 March 2025
Hi
As you have mentioned that it is the existing pvt ltd Company ( its not an issue at the time of incorporation) , if the shares are issued at a price less than the FMV, there will be no tax implications in the hands of the company.
But in the hands of the transferee, the difference between the FMV and the issue price will be taxed under Income from Other Sources under Section 56(2)(x) of the Income Tax Act at the applicable slab rate.
As you have mentioned that it is the existing pvt ltd Company ( its not an issue at the time of incorporation) , if the shares are issued at a price less than the FMV, there will be no tax implications in the hands of the company.
But in the hands of the transferee, the difference between the FMV and the issue price will be taxed under Income from Other Sources under Section 56(2)(x) of the Income Tax Act at the applicable slab rate.
You need to be the querist or approved CAclub expert to take part in this query .
Click here to login now
Click here to login now
Similar Resolved Queries
Unanswered Queries
- Refund Annexure-B
- Liable to deduct tds and 44ADA
- Sale of Equity shares for Purchase of Residential Property
- Nomination of Bank for refund in itr 2
- Section 56(2) of the Income tax Act 1961 , Gift to relative .
- ECO SUPPLY REPORTIONG IN GSTR-1
- Is Interest applicable for payment made through credit ledger vide DRC03 for FY 2020-21 & 2021-22
- CCFS 2026 Schemed
- Subscription paid to foreign customer
- Two seprate Invoice needed
- E Commerce GSTR1 & 3B how to file
- GST Cancellation without jurisdiction
- Legal Opinion on Registrar's Refusal to Investigate a Society for Non-Renewal and Non-Compliance
- GST Refund_RFD-01
- Form10BD was uploaded successfully without any Error but after 24 hours, Form10BE are not available
- Annexure B utility for GST Refund
- Tax amount diff in Gstr1 and 3B in tax compare reports
- Tds on GST in connection with sale to public company
- Restoration of certificate of practice
- Regarding change in correspondence address in SSP portal
Trending Online Classes
-
DT & Audit (Exam Oriented Fastrack Batch) - For May 26 Exams and onwards Full English
CA Bhanwar Borana & CA Shubham Keswani
CAclubindia
