India: CBDT issues final rules for valuation of unquoted shares

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The Central Board of Direct Taxes (CBDT) on 12 July 2017 has issued a notification prescribing the method for valuation of unquoted shares for the purposes of Section 56(2)(x) and Section 50CA of the Income-tax Act 1961. The rules will be effective from the 1st day of April 2018 and are to apply in relation to the assessment year 2018-19 and subsequent years.

The CBDT on 5 May 2017 issued a press release along with a draft notification relating to valuation of unquoted shares for the purposes of Section 56(2)(x) and Section 50CA of the Act. It was proposed to amend the rules to prescribe the method of valuation of unquoted shares for the purpose of these sections by taking into account the FMV of jewellery, artistic work, shares and securities and stamp duty value in case of immovable property and book value for the rest of the assets.

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