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Issue of Shares
under rule 11UA
The issuance of equity instruments to residents or non-residents falls under the scope of applicable Income Tax provisions, requiring compliance with relevant rules and regulations.
The fair market value of the unquoted equity shares is determined by a merchant banker.
Note: However, the above stated provision will not be applicable from 01st April 2025.
11UA Provisions for Unlisted Companies
Compliance with Income Tax Act 1961:
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Governed by Section 56(2)(viib) of the Income Tax Act, 1961, read with applicable rules.
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Valuation Certificate requirement: An unlisted company must obtain a valuation certificate from a Category 1 Merchant Banker registered with SEBI.
11UA Provisions for Listed Companies
Compliance with Income Tax Act 1961:
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Governed by Rule 11UA of the Income Rules 1962.
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Valuation Certificate requirement; There is no valuation requirement, when equity shares are being issued by a Listed company, under Income Tax.
Key Points to Consider
01
Which is the governing law for Unlisted
Income Tax Act 1961
02
Which is the governing law for listed
Income Tax Rules 1962
03
Who does the Valuation
Merchant Banker
04
When valuation is required
At the time of issuance of Equity securities
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