CBDT’s Draft IT Rule 17CB Method of valuation: FMV for Accreted Income of Trusts/ Institutions

Draft Rules for prescribing the method of valuation of fair market value in respect of the trust or the institution-Chapter XII-EB of the Income-tax Act, 1961

CBDT has issued Draft Rules for prescribing the method of valuation of fair market value in respect of trusts/ institution which ceases to exist as charitable organization or converts into a non-charitable organization and are subject to levy of additional income tax as per special IT provisions under Chapter XII-EB, as under:

CBDT’s Draft IT Rule 17CB dt. 24 Oct. 2016 for Comments by 31 Oct. 2016

1. The Finance Act, 2016, inter alia, inserted a new Chapter XII-EB consisting of sections 115TD, 115TE and 115TF in the Income-tax Act, 1961 (the Act). This chapter contains specific provisions relating to levy of additional income-tax where the charitable institution exempt under the Act ceases to exist as charitable organization or converts into a non-charitable organization.

2. Sub-section (2) of newly inserted section 115TD provides that the accreted income for the purposes of sub-section (1) thereof means the amount by which the aggregate fair market value of the total assets of the trust or the institution, as on the specified date, exceeds the total liability of such trust or institution computed in accordance with the method of valuation as may be prescribed. Therefore, the method of valuation of fair market value in respect of the trust or the institution as on the specified date for determination of accreted income needs to be prescribed in the rules.

3. Accordingly, it is proposed to insert rule 17CB in the Income-tax Rules, 1962. The draft rule 17CB, on which comments and suggestion of stakeholders and general public may be sent electronically by 31st October, 2016 at the email address, [email protected] in this regard, are as under:

Draft IT Rule 17CB: Method of valuation for the purposes of IT Section 115TD(2)

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