Chartered Accountant · ICAI M.No. 153926 · FRN 136869W · Reviewed on 13 October 2026
Transfers: the Rule 11UA NAV floor
When unlisted equity changes hands below FMV, two sections bite at once: the buyer is taxed on the shortfall under 56(2)(x) and the seller’s consideration is deemed up to FMV under 50CA. FMV here is the balance-sheet NAV per Rule 11UA — book values, except that immovable property, jewellery, art and quoted investments are substituted at their own market values. Family transfers and gifts between relatives sit outside 56(2)(x), but 50CA has no relative exception for sales.
Fresh issues: pricing floors after angel tax
With section 56(2)(viib) abolished for issues from 1 April 2024, the income-tax ceiling on premium is gone — but FEMA’s floor survives: shares issued to a non-resident cannot be priced below fair value certified by a CA or SEBI-registered merchant banker (internationally accepted methodology), with FC-GPR filed within 30 days of allotment. Investors’ diligence and your own next round also read the valuation history, so the report remains the deal’s backbone.
ESOPs and the odd corners
Perquisite tax on exercise of options over unlisted shares uses FMV from a merchant banker’s certificate on the specified date — a CA’s certificate does not serve there. Buybacks, rights renunciations and secondary sales each pull one of the above rules; the mistake is reusing last year’s number for this year’s event. Our share-issue practice matches the valuation type to the transaction before the paperwork starts.