Get Share Premium Received On Issue Of Shares Is Not Taxable Under The Income-tax Act Flash News

(iv) brother or sister of either of the parents of the individual; (v) any lineal ascendant or descendant of the individual; (vi) any lineal ascendant or descendant of the spouse of the individual; (vii) spouse of the person referred to in clauses (ii) to (vi).

(2) If the property is received for a inadequate consideration and difference between the stamp duty value and consideration is more than the higher of – ₹50,000 and 10% of the consideration, then, the stamp duty value in excess of the consideration would be taxable as income in the hands of the beneficiary.

Section 56(2)(viia) of the Income-tax Act, 1961 ('Act') provides for taxation of income where a company in which public are not substantially interested ('specified company')or a firm receives shares of a specified company from a person for no or inadequate consideration.

Any income which is not chargeable to tax under any other heads of income and which is not to be excluded from the total income shall be chargeable to tax as residuary income under the head “Income from Other Sources”. Basis of Charge [Sec. 56]:

When you receive a dividend, the total value (basis) of the stock doesn't change. Instead, the basis of each share changes. Stock dividends usually don't have tax implications until you sell the shares. So, the amount paid in cash for the fractional share is considered taxable income.

Section 56(2)(viib) of the Income Tax Act provides that where a closely-held company[1] issues shares to a resident investor at a value higher than the “fair market value” of such shares, then the excess of the issue price over the fair value will be taxed as the income of the issuer company.