Startups, unlisted companies on black money radar, probe on 200 entities
New Startups and unlisted auxiliaries of some real Indian organizations and multinationals find themselves in the crosshairs of the income tax department for raising funds through preference shares in excess of what it considers the fair market value.
The examination arm of the income tax department has sent the notification to around 200 entities under Section 56(2)(vii)(b) of the Income Tax Act, 1961, in August, two individuals with coordinate information of the issue told ET.
In cases where deals have been done at valuations higher than the fair value arrived at by tax authorities, queries have been raised
Fair market value is evaluated by the tax department in light of past exchanges and the record of comparable organizations. The Section is frequently connected when it’s presumed that organizations might be issuing shares at a premium over the reasonable incentive for washing unaccounted money.