Startups, unlisted companies on black money radar

They are under investigation for raising funds through preference shares in excess of what is considered the fair market value.

With income tax department tightening noose on black money, startups and unlisted subsidiaries of some major Indian companies as well as multinationals find themselves in the spot. 
 
They are under investigation for raising funds through preference shares in excess of what is considered the fair market value.
 
The investigation arm of the income tax department has sent notices to about 200 entities under Section 56(2)(vii)(b) of the Income Tax Act, 1961, in August, two people told ET.
 
The I-T department makes an assessement of the fair market value based on past transactions and the record of similar, comparable companies. 
 
The section is imposed when the tax deaprtment thinks that companies under question may be issuing shares at a premium over the fair value for laundering unaccounted cash.
 
The companies to whom notices have been served are under fear, given the government’s commitment to go after black money.
 
Source: ET

Event date: 
Thursday, September 7, 2017

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