valuation rules

Valuation For Transfer of Shares From Resident To Non-Resident

Income Tax - Valuation refers to the process of determining the present value of the asset being valued. The need for valuation of shares arises while performing certain transactions such as issue of further shares in the form of Right shares, merger and acquisitions, transfer of undertaking, etc. Valuation is usually performed by Chartered Accountant...

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Valuation – An Art or science?

Income Tax - Tanvi Pahwa* In today’s dynamic world every organisation feels the need to know the worth of value of its assets, business or even the company.  Valuation in simple terms means the economic value or worth of a business, asset or company....

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Interlinkage between Valuation and Transfer Pricing

Income Tax - We see that whenever there is any TP litigation in relation to valuation of assets or shares, following are the issues that are raised by the IRD while evaluating the valuation report:...

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Case Studies on Full Value of Consideration- Sec. 50C & Reference to Valuation Officer Sec. 55A

Income Tax - SECTION 50C – SPECIAL PROVISION FOR FULL VALUE OF CONSIDERATION IN CERTAIN CASES Applicability of Section 50C As per Sec 50C, where the consideration received or accruing as a result of the transfer of land and/or building is less than the value adopted or assessed or assessable by an authority of the state govt. for […]...

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Whether Excise Duty should be included in cost of finished goods for inventory valuation

Income Tax - Whether Excise Duty should be included in cost of finished goods for inventory valuation We all know that GST has been rollout from 1st July 2017 and it has subsumed a number of indirect taxes including excise duty. This means excise duty, technically, does not exist in India except on a few items such as […]...

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ICAI & ICAI RVO issues Concept Paper on All About Fair Value

Income Tax - Financial reporting in India has undergone a significant transformation owing to the adoption of Indian Accounting Standards (Ind AS) and fair value is the guiding principle in financial reporting across the globe. The Institute of Chartered Accountants of India (ICAI) converged accounting standards with IFRSs and accordingly, the financi...

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List of Indian Valuation Standards effective from 1st July, 2018

Income Tax - Indian Valuation Standards as issued by ICAI effective for the valuation reports issued on or after 1st July, 2018 The Institute of Chartered Accountants of India (ICAI) issues Valuation Standards as a benchmark for Valuation Practices applicable for Chartered Accountants Recognising the need to have the consistent, uniform and transparen...

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Draft Indian Valuation Standard 303 – Financial Instruments

Income Tax - Following is the Exposure Draft of the Indian Valuation Standard 303 Financial Instruments issued by the Valuation Standards Board of the Institute of Chartered Accountants of India, for comments....

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Draft Indian Valuation Standard 302 – Intangible Assets

Income Tax - The Board invites comments on any aspect of this Exposure Draft. Comments are most helpful if they indicate the specific paragraph or group of paragraphs to which they relate, contain a clear rationale and, where applicable, provide a suggestion for alternative wording....

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Draft Indian Valuation Standard 301 – Business Valuation

Income Tax - The Board invites comments on any aspect of this Exposure Draft. Comments are most helpful if they indicate the specific paragraph or group of paragraphs to which they relate, contain a clear rationale and, where applicable, provide suggestions for alternative wording....

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In absence of any defect DCF valuation method of Assessee cannot be rejected

Intelligrape Software Pvt. Ltd. Vs ITO (ITAT Delhi) - Intelligrape Software Pvt. Ltd. Vs ITO (ITAT Delhi) When the assessee Company had opted for valuation of unquoted equity shares in accordance with DCF method as prescribed under clause (b) of specific Rule 11UA(2) as applicable, the AO/CIT(A) had no power/authority to change such valuation methodolo...

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Actual results of later years cannot be used for Valuation of shares: ITAT

M/s Flutura Business Solutions Pvt. Ltd. Vs ITO (ITAT Bangalore) - Flutura Business Solutions Pvt. Ltd. Vs ITO (ITAT Bangalore) We are of the view that, the Assessing Officer has erred in considering the actuals of revenue and profits declared in the future years as a basis to dispute the projections. At the time of valuing the shares as on 16.04.2012, the actual r...

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Customs Valuation Rules- Invoice price cannot be rejected without cogent reasons

Guru Rajendra Metalloys India Pvt Ltd Vs C.C. (CESTAT Ahmedabad) - CESTAT are of the clear view that merely based on DGOV circular also, value cannot be enhanced which is without authority of law. It is clearly held that DGOV circular cannot override the provisions of Valuation Rules. ...

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DGOV guidelines not overrules Customs Valuation Rules

Sunland Alloys Vs C.C. (CESTAT Ahmedabad) - Sunland Alloys Vs C.C. (CESTAT Ahmedabad) The issue under consideration is whether the DGOV guidelines are over and above Customs Valuation Rules? In the present case, the appellant imported Aluminium Scrap under various Bill of Entries and the price declared in the Bill of Entry is as per the invoi...

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S. 56(2)(viib): AO cannot discard assessee’s method of Share Valuation

Narang Access Pvt. Ltd. Vs DCIT (ITAT Mumbai) - Narang Access Pvt. Ltd. Vs DCIT (ITAT Mumbai)  In the present case the valuation done by the assessee for valuing its shares is on the basis of DCF method and the AO could not have substituted it by NAV method rather he should have arrived at another value, if any, by applying DCF method only. [&he...

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Governance Structure of Registered Valuers Organisation 

Circulars No. IBBI/RVO/033/2020 - (23/04/2020) - The Companies (Registered Valuers and Valuation) Rules, 2017 (Rules) envisage Registered Valuer Organisations (RVOs) to act as front-line regulators for development and regulation of the valuation profession. The RVOs have the responsibility to admit, develop, monitor and discipline the members of t...

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CAs cannot do Valuation of unquoted equity shares under DCF method

Notification No. 23/2018-Income Tax [S.O. 2087(E)] - (24/05/2018) - Amendment in Rule 11U and 11UA omitting reference to the term accountant, thereby permitting only merchant bankers to determine the FMV of unquoted equity shares as per the Discounted Free Cash Flow Method ...

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Draft rules of valuation of FMV in respect of Trust or institution

Draft Notification No. F. No. 370142/21/2016-TPL - (24/10/2016) - Draft Rules for prescribing the method of valuation of fair market value in respect of the trust or the institution ceases to exist as charitable organization or converts into a non-charitable organization....

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Corrigendum to the new perquisite valuation rules for A.Y. 2010-11

Notification No. 2/2010-Income Tax - (12/01/2010) - Notification No. 2/2010-Income Tax at page 20 of the Gazette Notification, in sixth line of clause (B) of sub-rule 2, for “amount attributable to official use of the vehicle provided that the following conditions are fulfilled”, read “amount of charges met or reimbursed by the employer as redu...

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Inclusion of After Sale Service and Pre-delivery Inspection Charges in the assessable value

Circular No. 909/29/09-Central Excise - (11/12/2009) - Since these services are provided free by the dealer on behalf of the assessee, the cost towards this is included in the dealer's margin (or reimbursed to him). This is one of the considerations for sale of the goods (motor vehicles, consumer items etc.) to the dealer and will therefore be governed ...

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Recent Posts in "valuation rules"

In absence of any defect DCF valuation method of Assessee cannot be rejected

Intelligrape Software Pvt. Ltd. Vs ITO (ITAT Delhi)

Intelligrape Software Pvt. Ltd. Vs ITO (ITAT Delhi) When the assessee Company had opted for valuation of unquoted equity shares in accordance with DCF method as prescribed under clause (b) of specific Rule 11UA(2) as applicable, the AO/CIT(A) had no power/authority to change such valuation methodology and adopt a different book value meth...

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Actual results of later years cannot be used for Valuation of shares: ITAT

M/s Flutura Business Solutions Pvt. Ltd. Vs ITO (ITAT Bangalore)

Flutura Business Solutions Pvt. Ltd. Vs ITO (ITAT Bangalore) We are of the view that, the Assessing Officer has erred in considering the actuals of revenue and profits declared in the future years as a basis to dispute the projections. At the time of valuing the shares as on 16.04.2012, the actual results of the […]...

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Valuation For Transfer of Shares From Resident To Non-Resident

Valuation refers to the process of determining the present value of the asset being valued. The need for valuation of shares arises while performing certain transactions such as issue of further shares in the form of Right shares, merger and acquisitions, transfer of undertaking, etc. Valuation is usually performed by Chartered Accountant...

Read More
Posted Under: Income Tax |

Customs Valuation Rules- Invoice price cannot be rejected without cogent reasons

Guru Rajendra Metalloys India Pvt Ltd Vs C.C. (CESTAT Ahmedabad)

CESTAT are of the clear view that merely based on DGOV circular also, value cannot be enhanced which is without authority of law. It is clearly held that DGOV circular cannot override the provisions of Valuation Rules. ...

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DGOV guidelines not overrules Customs Valuation Rules

Sunland Alloys Vs C.C. (CESTAT Ahmedabad)

Sunland Alloys Vs C.C. (CESTAT Ahmedabad) The issue under consideration is whether the DGOV guidelines are over and above Customs Valuation Rules? In the present case, the appellant imported Aluminium Scrap under various Bill of Entries and the price declared in the Bill of Entry is as per the invoice of the foreign supplier. The [&hellip...

Read More

Valuation – An Art or science?

Tanvi Pahwa* In today’s dynamic world every organisation feels the need to know the worth of value of its assets, business or even the company.  Valuation in simple terms means the economic value or worth of a business, asset or company....

Read More
Posted Under: Income Tax |

Interlinkage between Valuation and Transfer Pricing

We see that whenever there is any TP litigation in relation to valuation of assets or shares, following are the issues that are raised by the IRD while evaluating the valuation report:...

Read More
Posted Under: Income Tax |

Case Studies on Full Value of Consideration- Sec. 50C & Reference to Valuation Officer Sec. 55A

SECTION 50C – SPECIAL PROVISION FOR FULL VALUE OF CONSIDERATION IN CERTAIN CASES Applicability of Section 50C As per Sec 50C, where the consideration received or accruing as a result of the transfer of land and/or building is less than the value adopted or assessed or assessable by an authority of the state govt. for […]...

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Posted Under: Income Tax |

Whether Excise Duty should be included in cost of finished goods for inventory valuation

Whether Excise Duty should be included in cost of finished goods for inventory valuation We all know that GST has been rollout from 1st July 2017 and it has subsumed a number of indirect taxes including excise duty. This means excise duty, technically, does not exist in India except on a few items such as […]...

Read More
Posted Under: Income Tax |

ICAI & ICAI RVO issues Concept Paper on All About Fair Value

Financial reporting in India has undergone a significant transformation owing to the adoption of Indian Accounting Standards (Ind AS) and fair value is the guiding principle in financial reporting across the globe. The Institute of Chartered Accountants of India (ICAI) converged accounting standards with IFRSs and accordingly, the financi...

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Posted Under: Income Tax |

Governance Structure of Registered Valuers Organisation 

Circulars No. IBBI/RVO/033/2020 (23/04/2020)

The Companies (Registered Valuers and Valuation) Rules, 2017 (Rules) envisage Registered Valuer Organisations (RVOs) to act as front-line regulators for development and regulation of the valuation profession. The RVOs have the responsibility to admit, develop, monitor and discipline the members of the profession....

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Special Valuation Branch – Procedures under Customs Valuation Rules

The Special Valuation Branch (SVB) investigates the transactions between the importer and the related foreign supplier. When the parties are related as per Rule 2(2) of the Customs Valuation (Determination of Value of Imported Goods) Rules, 2007 (Valuation Rules), then the valuation of goods as imported from such related foreign suppliers...

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Posted Under: Income Tax |

Market Approach under Valuation

Compared to the Income Approach that incorporates company specific estimates to arrive at the firm’s intrinsic value, the Market Approach relies on relative valuation to arrive at the value of a business, based upon how similar assets are priced in the market. ...

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Posted Under: Income Tax |

Valuation under Companies Act, Income Tax Act and FEMA

Article explains Legislative requirements of valuation of Securities and Financial Assets in India under the Companies Act, 2013, The Income tax Act, 1961 and Foreign Exchange Management Act, 1999 and Regulations made there under. The valuation profession has undergone a sea change in recent past especially after the introduction of conce...

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Posted Under: Income Tax |

Valuation by Registered Valuers under IBC, SEBI & Company Law

Registered Valuer is a new concept introduced by Section 247 of the Companies Act, 2013 to regulate the valuation of the various assets and liabilities related to a Company and to standardized the procedure of Valuation in line with International Valuation Standards. Before introduction of the concept of Registered Valuer, the valuation o...

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Posted Under: Income Tax |

A brief on valuation approaches for registered valuers

Types of approaches used in Valuation : A brief on valuation approaches for registered valuers With the introduction of concept of Registered valuer’ by Companies Act, 2013, the requirement for a professional and methodological  approach to valuation has arisen. Not a while ago, for majority of proefessionals the valaution of an eq...

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Posted Under: Income Tax |

S. 56(2)(viib): AO cannot discard assessee’s method of Share Valuation

Narang Access Pvt. Ltd. Vs DCIT (ITAT Mumbai)

Narang Access Pvt. Ltd. Vs DCIT (ITAT Mumbai)  In the present case the valuation done by the assessee for valuing its shares is on the basis of DCF method and the AO could not have substituted it by NAV method rather he should have arrived at another value, if any, by applying DCF method only. […]...

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Gold and Silver rates from 01.04.1981 to 31.03.2019

Value of gold contained in gold ornaments should be reduced by 14 to 20 per cent of ruling rates of standard gold, as per the practice prevalent in the bullion market and the amount of reduction has to be worked out in the following manner...

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Posted Under: Income Tax |

Valuation Of Shares Explained!

When a new company is incorporated, it requires the capital for which it issues the shares. The Memorandum of Association has the information on the authorised share capital, number of shares and face value of each share. Authorised capital is defined as the maximum amount of share capital that the company is authorized by its […]...

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Posted Under: Income Tax |

Need Valuation …. whom should I approach ?

Valuation refers to calculation of value of business/ underlying asset / liabilities of entity. One of key factors which drives valuation process is purpose. The Valuation approach will depend on the purpose for which the valuation is done. E.g. Practically the approach followed for Valuation of Inventory for the purpose of submission of ...

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Posted Under: Income Tax |

Valuation – Specific Laws required to appoint Registered Valuer

Section 247 of the Companies Act 2013 deals with Valuation by Registered Valuers. Where a valuation is required to be made in respect of any property, stocks, shares, debentures, securities or goodwill or any other assets or net worth of a company or its liabilities under the provision of Companies Act 2013 or Insolvency and Bankruptcy Co...

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Posted Under: Income Tax |

GST Valuation Rules

GST is a tax payable on ad-valorem basis i.e percentage of value of the supply of goods or services. Section 15 of the CGST Act and Determination of Value of Supply, CGST Rules, 2017 contain provisions related to valuation of supply of goods or services made in different circumstances and to different persons: 1. Value of supply o...

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Posted Under: Income Tax |

DCF Valuation method not sustainable in absence of evidence to suitability

Agro Portfolio Private Ltd. Vs ITO (ITAT Delhi)

Agro Portfolio Private Ltd. Vs ITO (ITAT Delhi) We are unable to accept the contentions of the assessee that in view of the provisions under section 56(2)(viib) of the Act read with Rule 11UA(2) of the Rules the Ld. AO had no jurisdiction to adopt a different method than the one adopted by the assessee, […]...

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Value of Excisable Goods: Inclusion of Drawing/Design Charges

Recently hundreds of show cause notices were issued to equipment manufacturers alleging that drawing/designs supplied to them by the principal manufacturers are additional considerations received by such manufacturers and value of designs/drawings are required to be included in the assessment value of the goods supplied. Such notices thre...

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Posted Under: Income Tax |

Valuation Standards

Background    The Ministry of Corporate Affairs (MCA) has notified the provisions governing valuation by registered valuers [section 247 of the Companies Act, 2013 (the Act)] and the Companies (Registered Valuers and Valuation) Rules, 2017 (the Rules), both to come into effect from 18 October, 2017. These rules are game changer in the d...

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Posted Under: Income Tax |

Practical issues in Share Valuations for Companies under Companies Act and Income Tax

Under Income Tax, three persons can get affected under various provisions of the Income Tax, if Shares are issued or transferred at a consideration less than Fair Market Value (FMV) i.e. Buyer, Seller or Company inself. Examples are given below....

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Posted Under: Income Tax |

Valuation of Financial Instrument

Financial instrument are those contracts that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity. Some of examples of financial instruments are investment in equity instruments of other entity, derivatives, debt instruments, compound instruments, deferred purchase considerations,...

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Posted Under: Income Tax |

Brief on Indian Valuation Standard 103 – Valuation Approaches & Methods

Indian Valuation Standard 103 - Valuation Approaches and Methods includes A) Market Price Method, Comparable Companies Multiple (CCM) Method, Comparable Transaction Multiple (CTM) Method, Discount for Lack of Marketability, Discount for Lack of Control (DLOC), Income Approach, Discounted Cash Flow (DCF) Method, Relief from Royalty (RFR)...

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Posted Under: Income Tax |

List of Indian Valuation Standards effective from 1st July, 2018

Indian Valuation Standards as issued by ICAI effective for the valuation reports issued on or after 1st July, 2018 The Institute of Chartered Accountants of India (ICAI) issues Valuation Standards as a benchmark for Valuation Practices applicable for Chartered Accountants Recognising the need to have the consistent, uniform and transparen...

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Posted Under: Income Tax |

CA valuation report now not valid u/r 11UA (2)(b) of Income-tax Rules, 1962

The valuation rules are specified under Rule 11U, Rule 11UA, Rule 11UAA and Rule 11UB for various provisions under the Income-tax Act, 1961 (‘the Act’) which cover valuation options in case of various assets including equity shares and other securities. These rules specify the methodology to be adopted at the time of arriving at fair ...

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Posted Under: Income Tax |

CAs cannot do Valuation of unquoted equity shares under DCF method

Notification No. 23/2018-Income Tax [S.O. 2087(E)] (24/05/2018)

Amendment in Rule 11U and 11UA omitting reference to the term accountant, thereby permitting only merchant bankers to determine the FMV of unquoted equity shares as per the Discounted Free Cash Flow Method ...

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Valuation of Financial Instruments – Requirements under various laws & regulations

Broadly, the valuation of financial instruments is required under the following laws & regulations: A. The Income-tax Act, 1961 B. The Companies Act, 2013 C. FEMA Regulations The requirements under the above laws and regulations have explained in detail in the ensuing paragraphs A.  Requirements under Income-tax Act, 1961 in respect ...

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Posted Under: Income Tax |

Draft Indian Valuation Standard 303 – Financial Instruments

Following is the Exposure Draft of the Indian Valuation Standard 303 Financial Instruments issued by the Valuation Standards Board of the Institute of Chartered Accountants of India, for comments....

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Posted Under: Income Tax |

Draft Indian Valuation Standard 302 – Intangible Assets

The Board invites comments on any aspect of this Exposure Draft. Comments are most helpful if they indicate the specific paragraph or group of paragraphs to which they relate, contain a clear rationale and, where applicable, provide a suggestion for alternative wording....

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Posted Under: Income Tax |

Draft Indian Valuation Standard 301 – Business Valuation

The Board invites comments on any aspect of this Exposure Draft. Comments are most helpful if they indicate the specific paragraph or group of paragraphs to which they relate, contain a clear rationale and, where applicable, provide suggestions for alternative wording....

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Posted Under: Income Tax |

Draft Indian Valuation Standard 202 – Reporting and Documentation

Following is the Exposure Draft of the Indian Valuation Standard 202 Valuation Report and Documentation issued by the Valuation Standards Board of the Institute of Chartered Accountants of India, for comments....

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Posted Under: Income Tax |

Valuation of unquoted shares…some distance to go

The Finance Act, 2017 has introduced two important sections in the Income tax Act, 1961, with the intent of curbing perceived tax abuse: section 56(2)(x) and section 50CA. While the existing anti-abuse section, i.e., section 56(2)(vii) was applicable only in case of individuals, HUF, firms and unlisted companies; section 56(2) (x) has bee...

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Posted Under: Income Tax |

Change in Valuation Method of Share – Sec.50CA / 56(2): Is it really a Big Mess!

There will be a change in Valuation Mechanism relating to valuation of unquoted equity shares for the purposes of section 56 and section 50CA of the Income-tax Act, 1961 as per Draft rules issued by CBDT....

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Posted Under: Income Tax |

Draft GST Determination of Value of Supply (Valuation) Rules as Released on 31.03.2017

1. Value of supply of goods or services where the consideration is not wholly in money Where the supply of goods or services is for a consideration not wholly in money, the value of the supply shall, (a) be the open market value of such supply; (b) if open market value is not available, be […]...

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Posted Under: Income Tax |

Construction Industry be Careful: Budget overrides Delhi HC Judgment- Suresh Kumar Bansal

Amid of all this steps an amendment has also been made under service tax laws relating to valuation of Construction Service. The real estate sector currently comes under the ambit of service tax, when it receives sum from its buyers during the construction period ...

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Posted Under: Income Tax |

Draft rules of valuation of FMV in respect of Trust or institution

Draft Notification No. F. No. 370142/21/2016-TPL (24/10/2016)

Draft Rules for prescribing the method of valuation of fair market value in respect of the trust or the institution ceases to exist as charitable organization or converts into a non-charitable organization....

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All about Valuation of Goodwill

A firms’ reputation of generally assessed by Goodwill earned by the firm during its tenure. The Goodwill has been defined by many, but no one has given a crystal clear definition. Goodwill is generally used in business world, to access the value of a firm. It an intangible, invaluable asset....

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Posted Under: Income Tax |

Reg. Rules & Forms for determining FMV of Indian & global assets

Comments and suggestions sought from stakeholders and general public on draft rules and forms prepared for determination of fair market value of Indian and global assets and the manner for reporting requirement on the Indian concern in which the foreign company or entity holds the assets in India....

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Posted Under: Income Tax |

Valuation of Physician Sample Manufactured on Job Work basis

Law cannot be interpreted broadly. It has to interpret case to case basis. It is very much clear that if the product is being manufactured for ultimate consumer and covered under provision of Legal Metrology Act and Rules, valuation of the goods shall be Under Section 4A of the Central Excise Act. But if the same product is being manufac...

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Posted Under: Income Tax |

Conditions & Limitations for Grant of Rebate of Duty on Goods Exported out of India

Rebate of duty on goods exported out of India is covered by Rule 18 of the Central Excise Rules, 2002. The Central Government may, by notification, grant rebate of- i. Duty paid on such excisable goods which are exported out of India, or ii. Duty paid on materials used in the manufacturing or processing of such goods....

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Posted Under: Income Tax |

Job work – Valuation under Excise

A job work transaction triggers Excise Duty liability if the process involves manufacture. The consequent question that arises is how to determine assessable value of the goods involved. The various provisions that linger in one’s mind are Rule 10 A 0r Rule 8 or Rule 11 of the Central Excise Valuation Rules 2000....

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Posted Under: Income Tax |

Reversal of CENVAT credit used in exempted goods or service

Under Rule-6 (1)- CENVAT credit shall not be allowed used in or in relation to manufacturing of exempted goods and services. Manufacturer or service provider is obliged to maintain separate account of input and input services for various activity. The CENVAT credit Rules made to facilitate assesses to reverse the CENVAT on exempted goods ...

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Posted Under: Income Tax |

Practical Aspects of Rule 6 of Central Excise Valuation Rules, 2000 (CEVR, 2000)

In this whole article, I will be discussing about practical aspects of Rule 6 of CEVR, 2000. This Rule comes into play when Price is not the sole consideration. But before talking about Rule 6, I will be discussing with my readers, what is the general provisions....

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Posted Under: Income Tax |

Customs Valuation: Mark up by 1% on account of Handling, Loading and Unloading Charges

In India, it is a common practice at customs that at the time of valuation of imported goods into India for levy of customs duty 1% mark up is made in the assessable value on account of handling, loading and unloading charges of the goods without going into detail what are in fact the actual expenses in this regard. ...

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Posted Under: Income Tax |

Gold and Silver Rates as on 31.03.2015

Gold rates 24 CARAT Rs.26,580.00 (99.50) per 10 gram 22 CARAT Rs.25,850.00 per 10 gram 20 CARAT Rs.24,150.00 per 10 gram 18 CARAT Rs.22,100.00 per 10 gram Silver Rates : Rs.37,500.00 Per Kg Related Posts- Gold & Silver rates from 01.04.1981 to 31.03.2014 Year end Rates of Gold & Silver from 1982 to 2014 with […]...

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Posted Under: Income Tax |

How much is your goodwill and entity worth?

Goodwill of an enterprise is an important ‘asset’ which is relevant for investors in their decision to invest or not and to know how goodwill is quantified? A chartered accountant may think this to be his forte to provide an answer but how much is the value of goodwill of an entity and value of an entity may be difficult to answer but...

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Posted Under: Income Tax |

Transfer of Cenvat credit on shifting of factory premises

The unutilized balance of Cenvat credit in the books of accounts is eligible to be transferred to the new premises when the factory is shifted from one site to another., in terms of rule 10(1) of the Cenvat Credit Rules,2004 (hereafter referred to as CCRs,2004).However, audit objections are being raised against such transfers, where the...

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Posted Under: Income Tax |

CENVAT Credit on Input Services

Input Service means any service,- (i) used by a provider of output service for providing an output service; or (ii) used by the manufacturer, whether directly or indirectly, in or in relation to the manufacture of final products and clearance of final products, up to the place of removal, and includes services used in relation to moderniz...

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Posted Under: Income Tax | ,

Implementation of Supreme Court Decision-case of Fiat India Ltd.

The Supreme Court has cited two instances where a manufacturer may sell goods at lower prices and yet the declared value can be ac­cepted- (i) company switching over business and (ii) where goods could not be sold within reasonable time]...

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Posted Under: Income Tax |

CBEC Wake Up: Examined The Need To Review Rule 8(3A) of CER, 2002

Rule 8(3A) of Central Excise Rules, 2002 stipulats that if an assessee defaults in payment of duty beyond thirty days from due date, the assessee shall not eligible to utilize cenvat credit for payment of duty and have to pay the duty consignment wise....

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Posted Under: Income Tax |

Issue of Invoice under Service Tax

According to Rule 5 of Service Tax Rules, 1994, records include computerized data and means the record as maintained by an assessee in accordance with the various laws in force from time to time. Records maintained as such shall be acceptable to Central Excise Officer....

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Posted Under: Income Tax | ,

All about CENVAT Credit Rules, 2004- Part 2

In Continuation to my earlier Article 'All about CENVAT Credit Rules, 2004- Part 1' in which I have discussed Rule 2(A) to Rule 5B of Cenvat Credit Rules,2004.I have discussed Rule 6 to 16 of Cenvat Credit Rules,2004 in this Article....

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Posted Under: Income Tax |

POP Service Rules 2012 Vs. Export Service Rules & Rules of Tax on of Services Provided from outside India

CA Vaibhav Sachdeva Comparative Analysis of Place of Provision (POP) of Service Rules 2012 with Export of Service Rules 2005 and Taxation of Services (Provided from outside India and received in India) Rules, 2006. As per the Notification No. 28/2012 – Service Tax dated 20th June, 2012 – Place of Provision of Services Rules, 2012 sha...

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Posted Under: Income Tax |

FAQs on Custom Duty Valuation Laws in India

Q1. What is Customs Value? Ans: Customs Value means the value of goods for the purposes of levying ad valorem duties of customs. Ad valorem duties of customs are duties levied according to the value of goods and are usually expressed as percentages of value. ...

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Posted Under: Income Tax |

Brief On Customs Valuation in India

ection 2(41) of the Customs Act, 1962 defines ‘Value’ in relation to any goods to mean the value thereof determined in accordance with the provisions of sub-section (1) of Section 14 thereof. The provisions of sub-section (1) of Section 14 apply for the valuation of both imported goods and export goods....

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Posted Under: Income Tax |

Amendment in Service Tax – Determination of Valuation Rules

Service tax payable by builders - Composition scheme of 25% available to builders done away with?: As per Rule 2A of Service Tax (Determination of Value) Rules, as amended on 17-3-2012 composition scheme of payment of tax @ 25% on value of works contract of construction available to builder, where the total amount charged includes value o...

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Posted Under: Income Tax |

AO can refer valuation officer if in his opinion value taken on 1.4.1981 is higher than fair market value

It is proposed to amend the provisions of section 55A of the Income-tax Act to enable the Assessing Officer to make a reference to the Valuation Officer where in his opinion the value declared by the assessee is at variance from the fair market value. Therefore, in case where the Assessing Officer is of the opinion that the value taken by...

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Posted Under: Income Tax |

SC on Valuation of free physician samples manufactured & distributed

Medley Pharmaceuticals Ltd. Versus The Commissioner of Central Excise & Customs, Daman (Supreme Court)

This Court has upheld the conclusion of the Tribunal that the physician’s samples have to be valued on pro-rata basis. The Tribunal, while arriving at the aforesaid conclusion, had relied upon its earlier decision in the case of Commissioner of Central Excise, Calicut vs. Trinity Pharmaceuticals Pvt. Ltd., reported as 2005 (188) ELT 48,...

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Discounted Cash Flow- A Complex Valuation Method

Despite being one of the most complex methods of stock valuation, Discounted Cash Flow (DCF) analysis gained wide popularity following the Great Stock Market Crash of 1929. Though DCF calculation has been used in some form or other since ancient times, it was formally expressed in modern economic terms for the first time by Mr Irving Fish...

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Posted Under: Income Tax |

EBITDA Multiple – A Smart Valuation Method

EBITDA (Earnings before Interest, Taxes, Depreciation and Amortisation) multiple is often called as Enterprise Multiple since it takes into account entire enterprise irrespective of capital structure. It takes into account a company's debt and cash levels in addition to its stock price and relates that value to the firm's cash profitabili...

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Posted Under: Income Tax |

All about Price-To-Earnings Ratio (P/E)

Price-To-Earnings Ratio is one of the simplest and most popular method of valuation which measures the price paid for a single share in comparison to its earnings per share. It is calculated by using the following formula:PE Ratio= Market Value Per Share / Earnings Per Share (EPS)...

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Posted Under: Income Tax |

Key Valuation Methods

Whether the capital markets are bearish or bullish, most of the investors generally face a common problem as to when to take position in a particular stock and when to exit so that they can maximize their profits. Investors usually want to know the value of stock that they are going to buy, hold or sell. The value of the stock may be the ...

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Posted Under: Income Tax |

Corrigendum to the new perquisite valuation rules for A.Y. 2010-11

Notification No. 2/2010-Income Tax (12/01/2010)

Notification No. 2/2010-Income Tax at page 20 of the Gazette Notification, in sixth line of clause (B) of sub-rule 2, for “amount attributable to official use of the vehicle provided that the following conditions are fulfilled”, read “amount of charges met or reimbursed by the employer as reduced by such higher amount attributable t...

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Perquisite Valuation rules not considered the inflation and old exempt amount limit been kept

The fringe benefit tax (FBT) was strongly opposed by India Inc, but there is no doubt that it was beneficial to the employees — they did not have to directly bear the tax on many perquisites. The repeal of FBT meant uncertainty on taxation of perks. Thankfully, there are few changes to the valuation rules when compared to the rules that...

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Posted Under: Income Tax |

Valuation of ESOP will be cumbersome and expensive for smaller unlisted companies

It’s not going to be easy for small and unlisted companies to issue employees stock options schemes (ESOPs) as per the latest Central Board of Direct Taxes (CBDT) rules for valuation of perquisites. The valuation rules for calculating the fair market value of shares allotted to employees is substantially the same as compared to the frin...

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Posted Under: Income Tax |

New perquisites valuation rules for Assessment Year 2010-11 are replica of old rules

The salaried class, reeling under the inflationary pressures, has suffered yet another setback this holiday season with the announcement of new perquisite valuation rules by the Central Board of Direct Taxes (CBDT) on December 18. The new rules have come in the wake of the abolishment of fringe benefit tax (FBT) by finance minister Pranab...

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Posted Under: Income Tax |

Salary Income -Valuation of Perquisites

Valuation of Perquisites under Rule 3 of Income Tax Rule 1962 read with sub section 2 of section 17 of Income Tax Act, 1961 (As Revised wide Income Tax (Thirteenth Amendment) Rules. 2009). The Finance (No. 2) Act, 2009, has withdrawn the levy of Fringe Benefit Tax ("FBT") on expenditure incurred by an employer on or after 1 April 2009. Co...

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Posted Under: Income Tax |

Valuation of Perquisites other then accommodation, motor car and ESOP for financial year 2009-2010

For the sake of convenience, the attached tables summarises the valuation rules for all perquisites prescribed in the new rule 3 except the valuation of perquisites in respect of accommodation, motor car and ESOP which are mentioned separately by us and link for the same is been given below . It may be noted that for most perquisites the...

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Posted Under: Income Tax |

New rules for valuation of perquisites for use of motor car by staff for personal use – provided by employer

The perquisites value of a motor car provided by an employer both for official and personal use has been enhanced by Rs. 600 to 800 per month depending on the engine capacity of the car. Also, the perquisites valuation for employer-provided chauffeur in such cases has been increased from Rs. 600 per month to Rs. 900 per month....

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Posted Under: Income Tax |

New Perquisite rules in respect of accommodation / house property provided by employer including accommodation in hotel

The much awaited new rules have now been notified by The Central Board of Direct Taxes (CBDT) vide Notification dated 18 December 2009. The amended provisions will be retrospectively effective from 1 April 2009 onwards. The new valuation rules as prescribed by CBDT and the comparative analysis with the earlier perquisite rules (Rule 3) ha...

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Posted Under: Income Tax |

New perquisite Valuation rules taxed almost all the perks

THE much-awaited perquisite valuation rules have finally been notified by the CBDT. The Board has amended Rule 3 to give effect to the abolition of FBT, announced in the Budget 2009. Vide Income Tax (13th) Amendment Rules, the Board has notified the new valuation guidelines w.e.f April 1, 2009 for the AY 2010-11. Although the rules are la...

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Posted Under: Income Tax |

Perquisites for salaried will be taxed from April 2009

Salaried employees may burn a hole in their pockets with the Government all set to impose tax on all perks –residential accommodation, conveyance and others -- paid for by the company, under a new law that replaces the already abolished Fringe Benefit Tax. Perquisites given by the employer such as residential accommodation, conveyance...

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Posted Under: Income Tax |

Tax burden of salaried increased as they have to pay taxes on perquisites as pre FBT norms returned back

Salaried taxpayers enjoying perks, such as chauffeur-driven cars, will see their tax outgo jumping in the next three months as the government changed the way these perks are valued and lumps their whole year collection to three months. The Central Board of Direct Taxes on Friday notified new rules for valuation of perquisites provided by...

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Posted Under: Income Tax |

Inclusion of After Sale Service and Pre-delivery Inspection Charges in the assessable value

Circular No. 909/29/09-Central Excise (11/12/2009)

Since these services are provided free by the dealer on behalf of the assessee, the cost towards this is included in the dealer's margin (or reimbursed to him). This is one of the considerations for sale of the goods (motor vehicles, consumer items etc.) to the dealer and will therefore be governed by Rule 6 of the Valuation Rules on the ...

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Services availed by a manufacturer for outward transportation of final products from the place of removal is input service

ABB Ltd. Vs CCE & ST (CESTAT Bangalore)

The services availed by a manufacturer for outward transportation of final products from the place of removal should be treated as an input service in terms of Rule 2(1)(ii) of the Cenvat Credit Rules, 2004 and thereby enabling the manufacturer to take credit of the service tax paid on the value of such services. ...

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Is FBT payable on ESOPs involving foreign shares?

THE Notification No. 264/2007 dated October 23, 2007 issued by the CBDT, specifying the Income-tax (12 th Amendment) Rules, 2007 seems to have brought in a lot of welcome clarity in terms of the methodology to be adopted for the determination of the Fair Market Value of ESOPs issued by Indian Companies, listed or unlisted. However, the qu...

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Posted Under: Income Tax |

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