CBDT CIRCULAR NO.2/2018 [F.NO.370142/15/2017-TPL], DATED 15-2-2018
30. Fair Market Value to be full value of consideration in certain cases.
30.1 Under the provisions of the Income-tax Act, income chargeable under the head “Capital gains” is computed by taking into account the amount of full value of consideration received or accrued on transfer of a capital asset. In order to ensure that the full value of consideration is not understated, the Income-tax Act also contains provisions for deeming of full value of consideration in certain cases such as deeming of stamp duty value as full value of consideration for transfer of immovable property in certain cases.
30.2 In order to rationalise the provisions relating to deeming of full value of consideration for computation of income under the head “capital gains”, a new section 50CA has been inserted in the Income-tax Act so as to provide that where consideration for transfer of share of a company (other than quoted share) is less than the Fair Market Value (FMV) of such share determined in accordance with the prescribed manner, the FMV shall be deemed to be the full value of consideration for the purposes of computing income under the head “Capital gains”.
30.3 Applicability: This amendment takes effect from 1st April, 2018 and will, accordingly, apply from assessment year 2018-19 and subsequent assessment years.