Section 50CA of ITA, 1961 : Section 50Ca: Special Provision For Full Value Of Consideration For Transfer Of Share Other Than Quoted Share

Explanation using Example

Imagine Mr. Gupta sells a non-listed share of XYZ Private Limited, which he owns, to Mr. Sharma for ₹50,000. However, the fair market value (FMV) of this share, as per the prescribed method by the Income Tax authorities, is ₹80,000. According to Section 50CA of the Income-tax Act, 1961, for the purpose of calculating capital gains tax, the sale consideration for Mr. Gupta will be deemed to be ₹80,000, not the actual transaction value of ₹50,000. This means Mr. Gupta will have to pay tax on a capital gain calculated on the basis of the FMV (₹80,000), despite having received only ₹50,000 from the sale.