Applicability of S. 56(2)(viib) to the Non-Resident Investor and amendment to Rule 11UA

The Finance Act 2023 has amended the provisions of S. 56(2)(viib) of the Income tax Act, 1961 (‘ITA’) and has widened the applicability of provision to cover even non-residents (excluding select entities as notified by CBDT1). Accordingly, the share premium received from a non-resident investor is also required to be justified with the valuation report as per Rule 11UA which computes the Fair Market Value (‘FMV’).