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Taxation Central Ministry of Finance Income Tax Act, 1961

Press Release: CBDT notifies changes to Rule 11UA in respect of Angel Tax

26-Sep-2023 | Press Release

Central Board of Direct Taxes has issued a Press Release announcing significant changes to Rule 11UA concerning Angel Tax.

The Press Release highlights the following key modifications to Rule 11UA:

a) For resident investors, in addition to the existing Discounted Cash Flow (DCF) and Net Asset Value (NAV) methods, five more valuation methods have been introduced for non-resident investors. These include Comparable Company Multiple Method, Probability Weighted Expected Return Method, Option Pricing Method, Milestone Analysis Method, and Replacement Cost Method.

b) When shares are issued and consideration is received from a non-resident entity notified by the Central Government, the Fair Market Value (FMV) of the equity shares corresponding to such consideration may be considered for both resident and non-resident investors, provided that the consideration from FMV does not exceed the aggregate consideration received from the notified entity. Additionally, the consideration should be received by the company from the notified entity within ninety days before or after the date of issue of the subject shares.

c) Similar provisions for price matching between resident and non-resident investors have been introduced in reference to investment by Venture Capital Funds or Specified Funds.

d) Valuation methods for determining the FMV of Compulsorily Convertible Preference Shares (CCPS) have been outlined.

e) A safe harbor provision of a 10% variation in value has been incorporated.

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