CBDT has proposed changes to Rule 11UA of Income Tax Act, 1961 in respect of ANGEL TAX. Rule 11UA currently prescribes two valuation methods with respect to valuation of shares namely, Discounted Cash Flow (DCF) and Net Asset Value (NAV) method for resident investors. It is proposed to include 5 more valuation methods, available for non-resident investors, in addition to the DCF and NAV methods of valuation.
Further, where any consideration is received by a company for issue of shares, from any non-resident entity notified by the Central Government, the price of the equity shares corresponding to such consideration may be taken as the FMV of the equity shares for resident and non-resident investors subject to the following:
- To the extent the consideration from such FMV does not exceed the aggregate consideration that is received from the notified entity and
- The consideration has been received by the company from the notified entity within a period of ninety days of the date of issue of shares which are the subject matter of valuation.