All About 11 UA Valuations and Advisors

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The Finance Act, 2023, comes with an amendment to bring the thought received from non-residents for the subject of shares by an unlisted corporation within the domain of Section 56(2) of the Income-tax Act, 1961 (the Act). It assures that if the consideration for issuing the shares goes beyond the fair market value (FMV) of the shares, it shall be taxable to income-tax under the heading ‘Income from additional sources’.

Following the term, the real commitment of the government is to engage stakeholders in the drafting of the law and make suggestions. They also invite feedback from stakeholders and the general public on the draft Rule 11UA for the valuation of techniques for calculating the fair market cost via a May 19, 2023 press release.

If you want to know more about the change, you should consult with 11 UA valuation advisors. The professional advisors are always ready to assist you.

Let’s discuss the key points about the changes in Rule 11 UA:

Apart from the two approaches for the share valuation, which include

  • Discounted Cash Flow (DCF)
  • Net Asset Value (NAV) method

They are counted with the residents under Rule 11UA; five other valuation techniques have been offered for the non-resident investors. They are named the Comparable Company Multiple Method, Option Pricing Method, Probability Weighted Expected Return Method, Milestone Analysis Method, and Replacement Cost Method.

  1. b) If some things are received for the issue of shares from any non-resident body notified by the Central Government, the cost of the equity shares corresponding to the thought may be taken as the FMV of the equity shares for resident as well as non-resident investors, accountable for:

(i) To the extent that the thought from such an FMV does not surpass the aggregate thought that is received from the notified body, and

(ii) The concern has been received by the company from the associated entity within 90 days

before or after the date of the subject of shares, which are the subject material of valuation.

If you are interested in 11 UA valuations and transaction valuation firm, you should contact the 11 UA valuation advisors. The advisors can help you find better solutions as per your business requirements. Objectivity and accuracy are important for making the right financial choice and mitigating potential disputes or legal problems. Just look for the right information, as it helps you manage things in a better way.

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