The New Rule 11UA: Valuation and Benchmarking of Shares corpzo.com

Introduction In recent years, there have been significant developments in the taxation of investments in startups and unlisted companies in India. The introduction of the ‘angel tax’ provision under section 56(2)(viib) of the Income-tax Act, 1961, brought non-resident investments within its ambit. To address concerns and ensure clarity in the taxation of investments, the Central Board of Direct Taxes (CBDT) has implemented amendments to Rule 11UA of the Income Tax Rules, 1962. These amendments introduce new valuation methods and benchmarking criteria for the valuation of shares issued by startups and unlisted companies. Let’s delve into the details of these changes and their implications for stakeholders.