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CS Professional · Corporate Restructuring, Valuation and Insolvency · Taxation and Stamp Duty Aspects of Corporate Restructuring

Deepak sells unquoted equity shares of a private company for Rs 6,00,000, which is less than their fair market value determined in the prescribed manner, being Rs 9,00,000. No exempted class or condition applies. What is the full value of consideration for capital gains?

The full value of consideration is Rs 9,00,000. For an unquoted share transferred for less than its fair market value determined in the prescribed manner, that fair market value is deemed the full value of consideration, unless a prescribed exempted class or condition applies.

  1. ARs 6,00,000, the actual consideration
  2. BRs 9,00,000, the prescribed fair market valueCorrect
  3. CRs 7,50,000, the mean value
  4. DRs 3,00,000, the shortfall

Explanation

For transfer of shares other than quoted shares, if the consideration is less than the fair market value determined in the prescribed manner, that value is deemed the full value of consideration. Rs 9,00,000 therefore applies. The stamp duty 110% tolerance is for land or building and does not apply here.

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