Shares Issued on Premium
If any closed held company issues shares to any resident share holder on premium then = Issue price of share – Fair Market Value of such shares shall be taxable in hands of company under Income From Other Sources.
Exception: Section 56(2)(viib) shall not apply to
Considerations received by a Venture Capital Undertaking from:
- Venture Capital Fund
- venture Capital Company
- Category I or Category II Alternative Investment Fund.
Consideration received by a Start up, working towards innovation, development, improvement or wealth creation and whose turnover up to 100 crores for 10 years since incorporation and fulfilling such other conditions as prescribed in the notification.
Note: Where the above start-up fails to comply with any of the conditions given under notification, any income exempted earlier shall be taxable in the year of failure and it shall be deemed that the company has misrepresented such income, thereby becoming liable penalty of 200% on the tax u/s 270 of the Act.
