Our's is a private limited company XYZ Private limited. We want to issue fresh shares. Can we issue the shares at face value of Rs10 per share or we have to issue at FMV as per section 56(2)(viib) of the Income Tax Act?? Also is section 56(2)(x) of Income Tax Act also has some relevance in case of issue of shares??
Yes you can issue shares at face value and there won't be any issue.
56(2)(viib) applies where you issue shares at a premium but here you are issuing shares at face value so there won't be a problem.
56(2)(X) only applies to individual and not company.
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Thank you
You can issue at face value.
Hi,
You should issue shared at fair market value. Otherwise, it could be treated as gift in the hands of person who is subscribing the shares. Hence, for you there is no issue even if you issue at face value. Issue will arise to the subscribers of the shares.
56(2)(X) does not have a relevance here.
Dear Sir,
Hope you are doing well !!
In my view, the issue of further shares by a private limited company at a price lower than the fair market value of the shares shall be subject to taxation in the hands of the recipient as per the provisions of Sec.56(2)(vii)(c) of the Income Tax Act, 1961.
However, there is no bar on issue of shares at face value.
Hi,
Yes, it can be issued at face value.
It has relevance with regards to recipient taxability.
