If shares in a closely held company are received by a firm or another closely held company from any person without consideration or for inadequate consideration, the aggregate fair market value of such shares as reduced by the consideration paid, if any, shall be chargeable to tax.
Note: Nothing would be chargeable to tax if taxable amount doesn’t exceed Rs. 50,000.
If a closely held public company receives any consideration for issue of shares which exceed the fair market value of such shares, the aggregate consideration received for such shares as reduced by its fair market value shall be chargeable to tax.
Note: This provision is not applicable in the following cases :
- Where the consideration for issue of shares is received by a venture capital undertaking from a venture capital company or venture capital fund.
- Where the consideration for issue of shares is received by company from class or classes of person as notified by the Government.
Any compensation received by a person in connection with the termination of his employment or modification of terms and conditions relating thereto.
Interest received on compensation or enhanced compensation.
Any sum of money received as an advance or otherwise in the course of negotiations for transfer of a capital asset shall be charged to tax.