Need Tally
for Clients?

Contact Us! Here

  Tally Auditor

License (Renewal)
  Tally Gold

License Renewal

  Tally Silver

License Renewal
  Tally Silver

New Licence
  Tally Gold

New Licence
 
Open DEMAT Account with in 24 Hrs and start investing now!
« Top Headlines »
Open DEMAT Account in 24 hrs
 8 reasons why old tax regime is still attractive for many taxpayers in this income tax bracket
 March 31 deadline is getting near. How to save income tax with tax loss harvesting?
 45-day MSME payment rule: Impact and details of Section 43B(h) explained
 Small savings schemes that offer tax benefits of up to Rs 1.5 lakh under section 80C
 RE-OPENING OF CORRECTION WINDOW FOR MAY 2024 CA EXAMINATIONS
 Powerful Upgrades, Tally 12+1 months renewal Plan and Connected Services for your growing Business - March 2024
 How innovative solutions can help fix the Sec 43B conundrum for MSMEs
 Income Tax dept asks many individuals to explain high value transactions of FY20-21 as Updated ITR deadline nears
 Release Notes for TallyPrime and TallyPrime Edit Log Release 4.1 | What s New!
 Deadline to file updated ITR FY20-21 ends on March 31: Details on additional tax
 4 tax-planning mistakes to avoid this season

Closing price on vesting day may fix FBT on Esops
July, 20th 2007

The finance ministry may settle for the closing price of shares of a listed company on the stock market on the day the scrips are vested with employees to decide valuations for the fringe-benefit tax (FBT). The ministry will soon issue guidelines on how to arrive at fair market value of shares given to employees, for assessment under FBT.

For listed companies, this is the standard valuation norm used by Sebi as well, said Mr Amitabh Singh, tax partner at Ernst & Young.

For unlisted companies, since their shares are not traded, the finance ministry may use guidelines set by the erstwhile Controller of Capital Issues (CCI) and tweak them a bit. The CCI had prescribed two methods for arriving at the fair market value for unlisted companies--profit earning capacity value (PECV) and net asset value (NAV).

Under the PECV method, the fair market value depends on estimated profitability of the company in future, taking into account various factors such as type of industry, economic risk and the expected future contracts. The NAV method calculates the fair market value by dividing the net worth of the company by the number of its shares.

Commenting on the move, Divya Baweja, tax partner, BMR& Co, said, The CCI guidelines were also used by RBI for valuation of shares. The exact impact of the guidelines, however, will be understood only once the government finalises and issues them.

Valuation Riddle
Listed companies
For listed companies, standard valuation norm used by Sebi to fix fair market value
Unlisted firms
For unlisted companies, finmin may tweak Controller of Capital Issues guidelines on using PECV and NAV methods
 
North Block could come out with the guidelines by mid-August, well in time for the second instalment of advance tax payable by September 15. It has already postponed the date of paying the first instalment of advance FBT on Esops to September 15 from June 15, as companies were unable to estimate the tax liability due to the lack guidelines for estimating fair market value.

Finance minister P Chidambaram had announced in Budget 2007-08, that FBT would be levied on Esops.

Home | About Us | Terms and Conditions | Contact Us
Copyright 2024 CAinINDIA All Right Reserved.
Designed and Developed by Ritz Consulting