Valuation of unquoted shares prescribed

The I-T department has come out with rules on valuation of unquoted shares of a company sold for an inadequate consideration. These shares would be taxed in the hands of the seller. 

The rules will dissuade transfer of properties through transfer of shares, which was a rampant practice to avoid stamp duties and capital gain taxation, says Rakesh Nangia, managing partner, Nangia & Co LLP. 

The rules state that the fair market value of unquoted equity shares will include the book value of all assets other than jewellery, artistic works, shares, securities and immovable property, and increased by the open market value of jewellery or artistic trust and shares, value adopted for payment of stamp duty for immovable properties.