Section 56 Exemption on consideration for issue of shares exceeding face value

Notification under clause (ii) of the first proviso to clause (viib) of sub section (2) of section 56 of the Income tax Act

CBDT issued Notification No. 30/2023 under the Income Tax Act. The notification states that the provisions of clause (viib) of sub-section (2) of section 56 shall not apply to consideration received by a company for the issuance of shares that exceeds the face value of such shares. However, this exemption applies only if the consideration is received from a person by a company that fulfills certain specified conditions and files the required declaration. The notification is effective from April 1, 2023.

MINISTRY OF FINANCE
(Department of Revenue)
(CENTRAL BOARD OF DIRECT TAXES)

Notification No. 30/2023-Income Tax, Dated: 24th May, 2023

S.O. 2275(E).—In exercise of the powers conferred by clause (ii) of the first proviso to clause (viib) of sub-section (2) of section 56 of the Income-tax Act, 1961 (43 of 1961) and in supersession of the notification of Government of India in the Ministry of Finance, Department of Revenue, Central Board of Direct Taxes published in the Gazette of India, Extraordinary, Part-II, Section 3, Sub-section (ii) vide number S.O. 1131(E) dated 5^th March 2019, except as respect things done or omitted to be done before such supersession, the Central Government, hereby notifies that the provisions of clause (viib) of sub-section (2) of section 56 of the said Act shall not apply to consideration received by a company for issue of shares that exceeds the face value of such shares, if the said consideration has been received from any person, by a company which fulfills the conditions specified in para 4 of the notification number G.S.R. 127(E), dated the 19^th February, 2019 issued by the Ministry of Commerce and Industry in the Department for Promotion of Industry and Internal Trade and published in the Gazette of India, Extraordinary, Part-II, section 3, Sub-Section (i) on 19^th February, 2019 and files the declaration referred to in para 5 of the said notification of the Department for Promotion of Industry and Internal Trade.

2. This notification shall be deemed to have come into force from the 1^st day of April 2023.

[Notification No. 30/2023/F. No. 370142/9/2023-TPL (Part-I)]

AMRIT PRITOM CHETIA, Under Secy. (Tax Policy and Legislation)

Explanatory memorandum

It is certified that no person is being adversely affected by giving retrospective effect to this notification