Tax department notifies rules for fair market value, posits formula

Q.  Tax department has notified rules for the FMV of listed companies on basis of a formula. What does the formula include for listed companies?
- Published on 01 Jul 16

a. Market cap
b. Book value of liabilities
c. Total number of shares
d. All of the above

ANSWER: All of the above
 
Tax department has notified rules for calculating fair market value or FMV of assets of listed companies to be computed on the basis of formula that takes market cap, book value of liabilities and total number of shares into account in case of listed companies.
  • In the case of unlisted companies, FMV is determined by a merchant banker or accountant as per internationally accepted valuation methodology.
  • As shares are listed on more than one recognised stock exchange, the price would be computed with reference to the recognised stock exchange which records highest volume of trading in shares during the period considered for determining the price.
  • As per the IT act, if any share or interest in a foreign company or entity gets its value from assets mostly located in India, the such share or interest is said to be situated in India.
  • Any income arising from transfer of share or interest is deemed to accrue or arise in India.
  • Share or interest is said to derive its value considerably from assets located in India, if FMV of assets in India is comprising 50 percent of the FMV of total assets of the company or entity
  • Any share or interest is to derived from India if FMV of asset is more than INR 10 crore

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    Discussion

  • poonam   -Posted on 02 Jul 16
    who dis fmv

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