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CA.Sonia (professional) (517 Points)

24 September 2013

Dear All,

What are the provisions applicable for issue shares at premium by a pvt ltd company ?

How to determine at what value premium can be charged &

Are there any Tax implications for the above ?

Thanks /

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3 Replies

Akash Jain (CA Final Student) (261 Points)
Replied 24 September 2013

For the purpose of Section 56 of Income Tax Act, you may refer to Rule
11UA for determination of fair market value. It specifically list the
procedure for valuation of shares both quoted and unquoted shares. Once
you get the fair market value, you can work our the premium to be
collected on issue of equity shares without attracting Section 56
(2)(viib) of Income Tax Act.

Ritzz (CA Final - Article ) (365 Points)
Replied 24 September 2013

Kindly refer the below link

https://company-registration.pro/procedure-for-issue-of-shares-at-premium/

Regards

Vishnu Agarwal (student) (39 Points)
Replied 25 September 2013

Please also note that u must be having the details regarding the nature and source of income of the shareholders and explanation regarding the geniuneness of the transaction otherwise during the asst section 69 of the it act can be invoked by the AO and the whole amt will be chargeable to tax at the highest rate