Off-market transfer of listed shares

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

04 January 2018 Dear fellow,

Please solve following doubts
Transaction type:- Off market transaction of Listed shares (short term).
Transferor:- Individual
Transferee:- Company

1) Can we decide the consideration in the off-market sale of the listed security or we need to consider prevailing market price?
2) If the prevailing market price is to be considered then which rate need to be considered? (Opening Closing or Average) since the broker takes 24 hours to perform the entire transaction.
3) If we consider price below the market price then what are the tax implications?

ND (Expert)
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04 January 2018 The pointwise reply to your questions is as under:-
1. The prevailing market price will have to be considered while doing the transaction.
2. In my view average of opening and closing rates can be taken.
3. Please see Section 56(2) read with Rule 11UA wherein it has been clarified that any sale/purchase of shares shall be done at the Fair Market Value. Otherwise difference between the transaction value and the FMV shall be treated as income from other sources in the hands of recipient.