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Update on Angel tax rules released via a notification dated 25th September 2023.

Update on Angel tax rules (draft rules were released in May 2023) released via a notification dated 25th September 2023. A few salient features:

  1. The Compulsorily Convertible Preference Shares (CCPS) valuation mechanism has been introduced.
  2. Safe Harbour of 10% extended to CCPS as well.
  3. The date of merchant banker's valuation report in cases where it is not more than 90 prior to the date of issue of shares undervaluation then such date can be deemed be the valuation date if the taxpayer so chooses.
  4. The five new valuation methods proposed in the Draft Rules for consideration received from the non-residents have been retained which are (i) Comparable Company Multiple Method, (ii) Probability Weighted Expected Return Method, (iii) Option Pricing Method, (iv) Milestone Analysis Method, and (v) Replacement Cost Method.
  5. Issue price means the consideration received by the company for one share.

 

 

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