CBDT amends IT Rules to debar CAs from Determining FMV of Unlisted Shares, Notifies Income Tax (Sixth Amendment) Rules, 2018
The CBDT has notified Income Tax (6th Amendment) Rules, 2018, to amend IT Rules 11U(a) and 11UA(2)(b) to debar Chartered Accountants (CAs) from conducting valuation of unlisted shares for determining fair market value (FMV) thereof as per Discounted Free Cash Flow Method, as under:
S.O. 2087(E).- In exercise of the powers conferred by sub-section (2) of section 56 read with section 295 of the Income-tax Act, 1961 (43 of 1961), the Central Government hereby makes the following rules further to amend the Income-tax Rules, 1962, namely:-
1. (1) These rules may be called the Income-tax (6th Amendment), Rules, 2018. (2) They shall come into force from the date of their publication in the Official Gazette.
2. In the Income-tax Rules, 1962 (hereinafter referred to as the principal rules), in rule 11U, clause (a) shall be omitted.
3. In the principal rules, in rule 11UA, in sub-rule (2), in clause (b), the words “or an accountant” shall be omitted.
Note.– The principal rules were published in the Gazette of India, Extraordinary, Part-II, Section 3, Sub-section (ii) vide notification number S.O.969(E), dated the 26th March, 1962 and last amended by the Income-tax (Fifth Amendment) Rules, 2018, vide notification number S.O. 1558 (E), dated 11th April, 2018.
ICAI Representation to CBDT for Reconsideration of Notification debarring CAs from Valuation
Direct Taxes Committee of ICAI has submitted a Representation to the CBDT on amendments made vide notification No. 23/2018 dt. 24 May, 2018 in Rule 11UA omitting reference to term “accountant”, thereby making Chartered Accountants ineligible to determine the FMV of unquoted equity shares as per the Discounted Free Cash Flow Method.