Recently, the Finance Act, 2017 inserted Section 56(2) (x) so as to widen the scope of taxability of receipt of sum of money or property without/inadequate consideration.
Considering the context and objective of section 56(2)(x) and section 50CA, the CBDT had come out with Draft Rules earlier ( May 2017). It suggested amendment in the method of valuation of unquoted equity share by taking into account the FMV of jewellery, artistic work, shares & securities and stamp duty value in case of immovable property and book value for the rest of the assets.
After considering the comments and suggestion, recently, the CBDT has notified final rules on 12 July 2017 which is largely in line with the draft rules.
Compared to the draft rule, few minor changes have been made:
(1) specific reference of balance sheet in the formula
(2) for the purpose of section 50CA, mechanism to compute FMV of unquoted preference shares has now been provided.
(3) With reference to section 50CA, it has now been provided that valuation date shall be the date on which unquoted share is transferred.