banner_ad

Rule 11ua of income tax

Tax queries 1236 views 1 replies

Rule 11UA (c)(b)

the fair market value of unquoted equity shares shall be the value, on the valuation date, of such unquoted equity shares as determined in the following manner, namely:

The fair market value of unquoted equity shares =       (A-L)    *(PV)

                                                                             (PE)

            Where,

A =  Book value of the assets in Balance Sheet as reduced by any amount paid as advance tax under the Income-tax Act and any amount shown in the balance sheet including the debit balance of the profit and loss account or the profit and loss appropriation account which does not represent the value of any asset.

L =  Book value of liabilities shown in the Balance Sheet but not including the following amounts:

   (i)  the paid-up capital in respect of equity shares;

  (ii)  the amount set apart for payment of dividends on preference shares and equity shares where such dividends have not been declared before the date of transfer at a general body meeting of the company;

(iii)  reserves, by whatever name called, other than those set apart towards depreciation;

(iv)  credit balance of the profit and loss account;

  (v)  any amount representing provision for taxation, other than amount paid as advance tax under the Income-tax Act, to the extent of the excess over the tax payable with reference to the book profits in accordance with the law applicable thereto;

(vi)  any amount representing provisions made for meeting liabilities, other than ascertained liabilities;

(vii)  any amount representing contingent liabilities other than arrears of dividends payable in respect of cumulative preference shares.

PE =     Total amount of paid up equity share capital as shown in Balance Sheet.

PV =     the paid up value of such equity shares.

 

 

My question is, to calculate the FMV of unquoted equity shares, the book value of assets and liabilities are to be considered?

and if that so, undepreciable assets in balance sheet having much higher market value would lead to inappropriate value of shares.

Replies (1)
do u need to have audited accounts as of the date of valuation? or Can you use provisional/management certified accounts for FMV calculation?


CCI Pro

Leave a Reply

Your are not logged in . Please login to post replies

Click here to Login / Register  

Company
Featured 02 May 2026
Senior Executive

hitesh chandwani & co

Pune

B.Com

View Details
Company
Featured 29 April 2026
Manager- Finance and Compliance

Naveen Fintech Pvt Ltd

Kolkata

CA Inter

View Details
Company
Featured 14 April 2026
GST CONSULTANT

Abhishek G Agrawal & Co.

Korba

CA Final

View Details
Company
Featured 13 April 2026
GST CONSULTANCY

Abhishek G Agrawal & Co.

Korba

CA Final

View Details
Company
Featured 28 March 2026
Accountant

Ashok Amol & Associates

New Delhi

B.Com

View Details
Company
Featured 28 March 2026
CA Final

Ashok Amol & Associates

New Delhi

CA Final

View Details
Company
Featured ARTICLESHIP 19 March 2026
Article Assistant

Gupta Sachdeva & Co. Chartered Accountants

New Delhi

CA Final

View Details
Company
Featured 14 March 2026
Associate CA

N N V Satish&co

Hyderabad

CA

View Details