CBDT Notifies relaxation for Start-ups on Issue of Shares at Price exceeding their FMV

CBDT Notifies relaxation for Start-ups on Issue of Shares at Price exceeding their FMV: Provisions of Section 56(2)(viib) not applicable in certain cases

CBDT notifies relaxation for start-ups by way of exemption from provisions of Section 56(2)(viib) relating to restriction on issue of shares at a price exceeding their fair market value (FMV), in case the consideration is received from certain approved investors, as under:

Start-ups can Issue Shares at Price Exceeding FMV: CBDT Notification No. 24/2018 Income Tax dt. 24 May 2018

S.O. 2088(E).—In exercise of the powers conferred by the clause (ii) of the proviso to clause (viib) of sub-section (2) of section 56 of the Income-tax Act, 1961 (43 of 1961) and in supersession of the notification number S.O. 1160 dated 14th June, 2016 issued by Department of Revenue, Central Board of Direct Taxes, the Central Government, hereby notifies that the provisions of clause (viib) of sub-section (2) of section 56 of the said Act shall not apply to consideration received by a company for issue of shares that exceeds the face value of such shares, if the consideration has been received for issue of shares from an investor in accordance with the approval granted by the Inter-Ministerial Board of Certification under clause (i) of sub-para (3) of para 4 of the notification number G.S.R. 364(E), dated 11th April, 2018 and published in the Gazette of India, Extraordinary, Part-II, Section 3, Sub-section (i) dated the 11th April, 2018 issued by the Department of Industrial Policy and Promotion.

2. This notification shall be deemed to have come into force retrospectively from the 11th April, 2018.

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