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Fair market value of unlisted shares

Yashu Mundhra (Accounts Executive) (28 Points)

21 July 2012

A client wants to sell shares of a private limited company. Please say how to calculate the FMV and what will be the tax implication arising from the sale of shares.

Thanks in advance

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CA Mayank Tulsyan (B.Com(H), ACA) (274 Points)
Replied 21 July 2012

The shares of a private company, if held for more than 12 months should qualify as long term capital asset . However the benefit of zero taxation which is available to listed shares on which STT is payable, would not be available to shares of a private company. So it will attract LTCG 20%.

And to my knowledge FMV of these shares should be taken as sale price Less actual cost paid to acquire shares.

Please correct me if am wrong.

Thanks