1. Income Disclosure Scheme 2016: Trading volume on exchange to decide fair value of share

Income Disclosure Scheme 2016: Trading volume on exchange to decide fair value of share

The Central Board of Direct Taxes (CBDT) has issued this clarification on a query that since shares are mostly listed on more than one recognised stock exchange, which price should be taken for determining fair value of the stock.

By: | Published: July 14, 2016 12:21 PM
Income Disclosure Scheme 2016: Trading volume on exchange to decide fair value of share The Central Board of Direct Taxes (CBDT) has issued this clarification on a query that since shares are mostly listed on more than one recognised stock exchange, which price should be taken for determining fair value of the stock. (Photo: PTI)

Valuation of shares bought through undisclosed income on which declaration is being made under the Income Declaration Scheme, 2016, would be done on the price quoted on the exchange where trading volumes of the scrip is higher on the valuation date.

The Central Board of Direct Taxes (CBDT) has issued this clarification on a query that since shares are mostly listed on more than one recognised stock exchange, which price should be taken for determining fair value of the stock.

“In such a case the quoted price of the share shall be computed with reference to the recognised stock exchange which records the highest volume of trading in the share as on June 1, 2016,” CBDT has said in a set of fresh clarifications issued on Thursday.

As per the Income Declaration Scheme, the fair value of quoted shares would be the higher or the cost of acquisition or the price determined by taking into account either the average of the lowest and highest price of such shares and securities quoted on a recognised stock exchange as on the June 1, 2016 the average of the lowest and highest price of such shares and securities on a recognised stock exchange on a date immediately preceding the June 1, 2016 when such shares and securities were traded on a recognised stock exchange, where on the June 1 there is no trading in such shares and securities on a recognised stock exchange.

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