Indore: The union government has closed ways through which tax can be evaded while selling a company by showing its less value. On doing so, a company proprietor will have to pay the balance tax to the income tax department at 30 percent rate along with penalty.
Chartered accountant Bhupendra Shah stated this while addressing a seminar at CA auditorium. It was organised to discuss provisions related to income tax valuation. Provision regarding income tax valuation has always been a subject of controversy as it has never been uniform.
In his address, Shah spoke on new provisions related to purchase and sale of shares and how Income Tax Act will impact them. He said valuation of shares of private company will also be done according to market price after which it will be sold.
An example is National Herald case in which taxes worth Rs 100 crore were imposed on Young India company for selling National Herald at lower price.
He stated that these provisions will influence those companies whose books have shown lands in company’s name. Now, the evaluation of those companies would be done as per government guideline. Auditor Abhay Sharma, CA Indore Branch chairman, also expressed his views.
