Example 1

Suppose  a Company has authorized share capital of Rs 100000 (10000 shares @ 10 each)

Suppose it issue its shares to shareholders @ 15 each (Rs 10 par value and Rs 5 Premium)

What is treatment in Income Tax of Rs 5 per share extra received?

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Example 2

Suppose  a Company has authorized share capital of Rs 100000 (10000 shares @ 10 each)

Suppose it issue its shares to shareholders @ 8 each (Rs 10 par value and Rs 2 Discount)

FMV of Share is Rs 7

What is taxable treatment?

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  1. Income Tax
  2. Income from Other Sources
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Davneet Singh's photo - Teacher, Computer Engineer, Marketer
Davneet Singh
Davneet Singh is a graduate from Indian Institute of Technology, Kanpur. He has been teaching from the past 8 years. He provides courses for Maths and Science at Teachoo. You can check his NCERT Solutions from Class 6 to 12.