I-T invites comments

I-T invites comments on draft rules for valuing startup investment by non-residents

THE INCOME TAX department on 26th May 2023 invited comments from stakeholders on rules for valuing non-resident investment in unlisted startups

The Central Board of Direct Taxes (CBDT) has, in a draft notification, invited comments on the draft rule 11UA of Income-tax Rules, 1962 on the computation of Fair Market Value (FMV) of unquoted equity shares through five methods under Section 56(2)(VIIb) of Income-tax Act, 1961.

Rule 11UA, which is now in practice, prescribes two valuation methods – Discounted Cash Flow (DCF) and Net Asset Value (NAV) – for resident investors.

The Government intends to include five additional valuation methods specifically for non-resident investors, in addition to the existing DCF and NAV methods.

Draft notification released by CBDT is given below. Stakeholders and the general public can send suggestions and comments on the draft rules by June 5 to ustpl2@nic.in