Monday, July 12, 2021
INTRODUCTION
CBDT prescribes rules for determining the ‘full value of consideration’ in case of slump sales, for computing capital gains.
The rules provide that the higher of the value determined basis a book-value formula (FMV1) or the actual consideration (FMV2) shall be considered to be the full value of consideration.
Recently the Central Board of Direct Taxes (“CBDT”) released the much-awaited valuation rules for computing capital gains arising from a slump sale (“Valuation Rules”). The Valuation Rules come on the heels of an amendment made earlier this year via the Finance Act, 2021 requiring capital gains from slump sales to be computed with reference to fair market value (“FMV”) of the undertaking being transferred.