How to fill ITR Schedule SH-1: Shareholding of Unlisted Company

Schedule SH-1: Shareholding of Unlisted Company (An understanding on how to fill it along with Illustration)

SCHEDULE SH-1: SHAREHOLDING OF UNLISTED COMPANY

(An understanding on how to fill it along with Illustration)

Each year CBDT notifies new ITR’s and brings changes in the Income Tax Return and requires new information from the taxpayers. Like each year, this year also CBDT has required new reporting requirements in Schedule SH-1 & Schedule AL-1 in the Income Tax Returns for all unlisted companies. However an unlisted foreign company is not required to furnish details of shareholding as at the end of previous year in the Schedule SH-1 of ITR-6.

Here in this article, we shall be discussing on reporting requirement as per Schedule SH-1 for all unlisted companies (other than a start-up for which Schedule SH-2 is to be filled up).

Table-1 of Schedule SH-1: Details of shareholding at the end of the previous year i.e. details of shareholders as on 31^st March 2019:

Detailed information of shareholders as on 31^st March 2019 is to be provided by Unlisted Companies. Details of those share holders who ceased to be share holder during the financial year 2018-19 will not be shown in this table.

The details required in this table of Schedule SH-1 of ITR-6 are as under-

1. Name of the Shareholder as on 31^st March 2019, his PAN & his Residential Status-whether resident/non-resident/resident but not ordinarily resident.

2. Type of shares- whether

a. Equity shares, or

b. Preference shares, or

c. Right shares, or

d. Sweat Equity Shares, or

e. Bonus Shares

3. Number of shares held by him

4. Face Value per share

5. Date of allotment: Date when shares held by respective shareholder was originally allotted by the company

6. Issue Price per share: Price at which the shares held by respective shareholder was originally allotted by the company i.e. face value plus securities premium per share at the time of allotment

7. Amount received: Amount actually received by the company at the time of allotment of shares held by respective shareholder (i.e. Number of shares held * Issue Price per share)

Illustration (1): 10000 Shares of face value of Rs. 10 per share were issued by an unlisted company on 01.04.2010 at Rs. 50 per share. Out of those 10000 shares, 6000 shares were allotted by the company to Mr. A, 3000 shares were allotted to Mr. B and balance 1000 shares were allotted to Mr. C.

Case-1: All of them are still holding the shares originally allotted to them as on 31.03.2019. Here reporting will be as under:

Case-2: Out of 3000 shares held by Mr. B, he has transferred 2000 shares to Mr. C at Rs. 20 per share on 01.04.2015. Here reporting will be as under:

*Note- Mr. C, although acquired 2000 shares through transfer from Mr. B at Rs. 20 per share, still the issue price of those shares at the time of original allotment was Rs. 50 per share and Issuer Company has received Rs. 50 per share against allotment of those shares on the date of original allotment. Hence Rs. 50 per share may be shown as issue price and correspondingly Rs. 100000 may be shown as amount received in the lack of any clarifications by government. Government may suitable clarify on reporting to be made in the case of shares received through transfer by the current share-holder.

Table-2 of Schedule SH-1:

Details of equity share application money pending allotment at the end of the previous year:

Detailed information of amount received by the unlisted company against equity shares pending allotment as on 31^st March 2019 is to be provided in this table by an unlisted company. Details of those share application, against which shares have already allotted till 31^st March 2019 will not be shown in this table, rather the same will be shown in Table-1 itself.

The details required in this table of Schedule SH-1 of ITR-6 are as under-

1. Name of the share applicant, his PAN & his Residential Status-whether resident/non-resident/resident but not ordinarily resident.

2. Type of shares- whether

a. Equity shares, or

b Preference shares, or

c. Right shares, or

d. Sweat Equity Shares

3. Number of shares applied for

4. Face Value per share

5. Date of application: Date when share applicant has applied for issuance of shares to him

6. Proposed Issue Price per share: Price at which the shares are proposed to be issued i.e. face value plus proposed securities premium.

7. Application money received: Amount actually received by the company at the time of application by the applicant (i.e. Number of shares applied for * proposed issue price per share)

Illustration (2): 25000 Shares of face value of Rs. 10 per share is proposed to be issued by an unlisted company at Rs. 30 per share. On 1^st March 2019, the company has received subscription from Mr. A, Mr. B, Mr. C and Mr. D for 10000 shares each against the proposed issuance of shares. No allotment has been made by the company till 31^st March 2019. Here reporting will be as under:

Table-3 of Schedule SH-1:

Details of shareholders who are not a shareholder at the end of the previous year but were a shareholder at any time during the previous year:

Here details of those shareholders who have transferred the shares of an unlisted company during the financial year 2018-19 are to be reported. That means, details of those share holders who did not have a shareholding as on 31st March, 2019 but had a shareholding during the financial year 2018-19 is to be reported by an unlisted company.

Thus details of a person who was shareholder during the financial year 2018-19 even for a single day, but not a shareholder as on the close of the financial year 2018-19 i.e. as on 31.03.2019, is to be given in this table of Schedule SH-1 of Form ITR-6, as under.

1. Name of the erstwhile shareholder i.e. shareholder who has ceased to be shareholder during Financial year 2018-19 , his PAN & residential Status

2. Type of shares- whether

a. Equity shares, or

b. Preference shares, or

c. Sweat Equity Shares, or

d. Bonus Shares

3. Number of shares held by him before cessation

4. Face Value per share

5. Date of allotment: Date when shares held by erstwhile shareholder as on cessation was originally allotted by the company

6. Issue Price per share: Price at which the shares held by erstwhile shareholder was originally allotted by the company i.e. face value per share plus securities premium per share at the time of allotment

7. Amount received: Amount actually received by the company at the time of allotment of shares held by erstwhile shareholder (i.e. Number of shares held * Issue Price per share)

8. Date on which cease to be shareholder: Date of transfer/ sale/ relinquishment of rights

9. Mode of cessation: whether

a. Transfer/ Sale, or

b. Relinquishment of rights

10. In case of transfer, PAN of the new shareholder: PAN of the transferee to whom the shares were transferred.

Illustration (3): 10000 Shares of face value of Rs. 10 per share were issued by an unlisted company on 01.04.2010 at Rs. 50 per share. Out of those 10000 shares, 6000 shares were allotted by the company to Mr. A, and balance 4000 shares were allotted to Mr. B.

Case- 1: On 01.10.2018, Mr. B transferred his 4000 shares to Mr. C at Rs. 20 per share. Here reporting in Schedule SH-1 will be as under:

 Case- 2: On 01.04.2015, Mr. B transferred his 4000 shares to Mr. C at Rs. 20 per share. Mr. C further transferred those 4000 shares on 01.03.2019 (financial year 2018-19) to Mr. D at Rs. 35 per share. Here reporting in Schedule SH-1 will be as under:

Conclusion: In the light of newly introduced Schedule SH-1 for ITR-6 to be filed for Assessment year 2019-20 by an unlisted company, reporting requirement has increased several fold as in case of an unlisted companies incorporated many years back and in case of multiple issuance of shares by an unlisted company and multiple exchange of shares between different shareholders from the date of subscription till 31^st March 2019, it becomes much difficult to track all such issuance and transfers and thereafter compile the original date of allotment, original issue price and amount received by the company at the time of allotment of shares hold by the current share holder.

Thus compilation of information with respect to Schedule SH-1 requires an unlisted company to unfold the history of the company with respect to issuance and transfer of its shares, which will take significant amount of time and efforts. In this juncture, 30^th September, the current due date of filing ITR-6 doesn’t seems to be realistically achievable and may either suitably be extended by the government  or the reporting requirement may be simplified by way of suitable clarification.

Alternatively the government may amend the Schedule SH-1 to the effect that the schedule may instead of capturing information with respect to original allotment, may capture information with respect to transfer such as “Date of Transfer”, “Transfer Price” etc. in case of shares received by the current shareholder by way of transfer in the secondary market.

Further in case of an unlisted company who has dematerialized its shares, it becomes impossible to identify the original allotment date and issue price with respect to shares held by current share holders. So in such a case, reporting requirement should either be exempted by the government or suitable amended by the government.

(Disclaimer: This write up is based on the understanding and interpretation of the author and the same is not intended to be a professional advice.)

[The author is Chartered Accountant and can also be reached at goyalcanitin@gmail.com]