Section 50CA:Special provision for full value of consideration for transfer of share other than quoted share.

A new section 50CA shall be inserted w.e.f 01/04/2018 which provides for valuation of full consideration in case of transfer of Unquoted shares.

Under this section, when an assesse receives or accrues consideration by transfer of shares of an unquoted company which is less than the fair  market value, then such fair market value will be regarded as the full value of consideration for calculaion of Capital Gains.

The draft rules for calculation of Fair market value has been released and are yet to be notified as an amendment to rules.

The draft provides for substitution of sub clause (b) of clause (c) of rule 11UA and value the fmv as:

Value of unquoted shares=(A+B+C+D – L)× (PV)/(PE)


A= book value of all the assets (other than jewellery, artistic work, shares, securities and immovable property) , Less-

(i) any amount of income-tax paid, if any, less the amount of income-tax refund claimed, if any,

(ii) any amount shown as asset including the unamortised amount of deferred expenditure which does not represent the value of any asset i.e.fictitious assets are to be reduced.

B = the price which the jewellery and artistic work would fetch if sold in the open market on the basis of the valuation report obtained from a registered valuer i.e. market value of jewellery and artistic work.

C = fair market value of shares and securities as determined in the manner provided in this rule;

D = the value adopted or assessed or assessable by any authority of the government for the purpose of payment of stamp duty in respect of the immovable property i.e. stamp duty value of Immovable property.

L= book value of liabilities, Less:—

(i) the paid-up capital in respect of equity shares;

(ii) the amount set apart for payment of dividends on preference shares and equity shares;

(iii) reserves and surplus, even if the resulting figure is negative, other than those set apart towards depreciation;

(iv) any amount representing provision for taxation, other than amount of income tax paid, if any, less the amount of income-tax claimed as refund, if any, to the extent of the excess over the tax payable with reference to the book profits in accordance with the law applicable thereto;

(v) any amount representing provisions made for meeting liabilities, other than ascertained liabilities; (vi) any amount representing contingent liabilities other than arrears of dividends payable in respect of cumulative preference shares;

PE = total amount of paid up equity share capital as shown in the balance-sheet;

PV= the paid up value of such equity shares;”

For, draft rules click on the link below:

Draft rules for valuation of FMV of unquoted shares.


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