CBDT issues final notification in respect of valuation of unquoted equity shares

Global Tax Update : August 2017 / India

This newsletter explains 4 topics including " CBDT issues final notification in respect of valuation of unquoted equity shares ". (Global Tax Update:August 2017/India)

1. CBDT1issues final notification2in respect of valuation of unquoted equity shares3

Finance Act 2017 introduced additional anti-avoidance measures under the domestic tax law/ Act4  regarding taxability on transfer of unquoted shares below fair market value (‘FMV’)5. It introduced deeming fiction where FMV of unquoted shares is deemed to be its consideration for purpose of computing capital gains in the hands of transferor.

1. Central Board of Direct Taxes
2. Notification No. 61/2017/F. No. 149/136/2014-TPL
3. Amending Rule 11UA of the Income tax Rules, 1962
4. Income-tax Act, 1961
5. Section 50CA of the Income tax Act, 1961

2. CBDT issues modified circular6 clarifying no TDS with respect to component of GST on services

Indirect taxes in India have been replaced by a unified tax called Goods and Services Tax (GST) w.e.f 1 July 2017.

6. Circular No. 23/2017 dated 19 July, 2017

3. SEBI7tightens norms for P-notes8

In an endeavor to tighten norms for P-Notes in India, SEBI issued a circular stating that the P-Note/ offshore derivative instruments (ODIs) issuing FPI shall not be allowed to issue ODIs with derivatives as underlying except where those derivative positions that are taken by the ODI issuing FPI for hedging the equity shares held by it, on a one to one basis.

7. Securities & Exchange Board of India - the securities market regulator in India
8. In the context of the Indian Market, P-Notes/ (ODI) are instruments issued by the FPIs to various foreign investors who cannot make investment in Indian capital market directly. P-Notes/ ODIs are instruments with Indian security as the underlying. Further, the ODI route is relevant for foreign investors who want an Indian exposure with lower overall costs and administrative overheads including engaging a custodian and filing tax returns in India and without getting registered with SEBI

4. Regulatory fee levied by SEBI

SEBI has levied a ‘regulatory fee’ of USD 1,000 on each ODI subscriber which would be collected and deposited by the issuing FPI to the Board once in every three years, starting from 1st April 2017.


>> Click for Japanese [直接税中央委員会(CBDT)が非上場株式の株価算定に関する最終通達を発表 ほか]

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