Income- tax (16th Amendment) Rules, 2021

The Central Board of Direct Taxes (CBDT) on May 24, 2021 has issued Notification No. G.S.R. 338 (E) - the Income- tax (16th Amendment) Rules, 2021 to further amend the Income-tax Rules, 1962.

The following amendments have been made:

• Rule 11UAE, which specifies the computation of fair market value of capital assets for the purpose of section 50B of the Income Tax Act, has been inserted, namely:

“For the purpose of clause (ii) of sub-section (2) of section 50B, the fair market value of the capital assets shall be the FMV1 determined under sub-rule (2) or FMV2 determined under sub-rule (3), whichever is higher.

The FMV1 shall be the fair market value of the capital assets transferred by way of slump sale determined in accordance with the formula A+B+C+D – L.

FMV2 shall be the fair market value of the consideration received or accruing as a result of transfer by way of slump sale determined in accordance with the formula E+F+G+H.

The fair market value of the capital assets under sub-rule (2) and sub-rule (3) shall be determined on the date of slump sale and for this purpose valuation date referred to in rule 11UA shall also mean the date of slump sale.”