Notification

  • Image

    Join us for an insightful session Navigating Due Diligence for Startups & Investors – 26th June 2025, 3PM onwards.

    Read More
  • Not Able to Find What You’re Looking For? Speak to us directly! Our experts are here to guide you through any queries or challenges.

    Speak to Us

Insights on Equity Share Transfers

Do you hold equity shares in a private limited company that has invested in immovable property or shares of another company? It’s essential to understand how Fair Market Value (FMV) is calculated for equity share transfers of such private limited company.

Under the Income Tax Act, equity share transfers must be executed at FMV, as determined by Rule 11UA. According to Rule 11UA of the Income Tax Rules, the FMV is calculated based on the Net Asset Value (NAV).

The NAV is calculated by subtracting total liabilities from total assets. However, special consideration is required for:
1. Investments in Shares and Securities: These must be valued at their fair market value, not book value.
2. Investments in Immovable Property: The value should be the stamp duty value adopted or assessed by any governmental authority. This necessitates obtaining a valuation report from a registered valuer (L&B).

For companies and stakeholders, understanding these nuances is crucial.

About the Author
Priya Kapasi Shah
Priya Kapasi Shah
Associate Partner | Tax & Regulatory | priya.k@treelife.in

Heads Treelife’s Financial Advisory practice, specializing in investment structuring, cross-border transactions, and tax and regulatory advisory. Also leads on AIF setups and advisory services for GIFT IFSC.

Rohit Gandhi
Rohit Gandhi
Senior Associate | Tax & Regulatory | rohit.g@treelife.in

Specializes in financial due diligence, valuations, business structuring, and income tax advisory. Contributes to the Financial Advisory team by helping startups and businesses make informed strategic decisions.

Jitesh Agarwal
Jitesh Agarwal
Founder | jitesh@treelife.in

Leads the VCFO, finance tax, and regulatory functions at Treelife. Responsible for the firm’s non-operational growth and providing strategic advisory in GIFT City, helping clients navigate complex regulatory landscapes effectively.

We Are Problem Solvers. And Take Accountability.

Related Posts

Are You Paying the Right Tax on Your Virtual Digital Assets (VDAs)? Here’s What You Need to Know Before Filing Your ITR
Are You Paying the Right Tax on Your Virtual Digital Assets (VDAs)? Here’s What You Need to Know Before Filing Your ITR

With India’s growing adoption of cryptocurrencies, NFTs, and tokens, it's critical for investors and traders to understand how these Virtual...

Learn MoreLearn More
Understanding Valuation Rules for Share Transfers (Post Angel Tax Removal)
Understanding Valuation Rules for Share Transfers (Post Angel Tax Removal)

With the removal of Section 56(2)(viib), commonly known as Angel Tax, the landscape for startup funding and share transfers has...

Learn MoreLearn More
Raising Funds from Friends and Family(F&F) – Early-Stage Startups
Raising Funds from Friends and Family(F&F) – Early-Stage Startups

Raising funds from friends and family is a common strategy for early-stage startups, particularly during the initial or pre-revenue phase....

Learn MoreLearn More

For Customer Support

Mumbai | Delhi |
Bangalore | GIFT City

Speak to Us!

We respond within 60 minutes.

    Your information is confidential and secure

    For Customer Support

    Mumbai | Delhi |
    Bangalore | GIFT City

    Fill out the form to unlock the full report!

    Image