The Central Government (Central Board of Direct Taxes) has made the draft Income-tax (____ th amendment), Rules, 2018 to further amend the Income-tax Rules, 1962. It is proposed to insert a new Rule 11UAB in the Income-tax Rules, 1962 for prescribing the manner of determination of fair market value of the inventory which has been converted into, or treated as, capital asset.
In the Income-tax Rules, 1962, after Rule 11UAA, the following rule is proposed to be inserted, namely:
“11UAB: Determination of fair market value for inventory.
(1) For the purposes of clause (via) of section 28 of the Act, the fair market value of the inventory,—
(i) being an immovable property, being land or building or both, shall be the value adopted or assessed or assessable by any authority of the Central Government or a State Government for the purpose of payment of stamp duty in respect of such immovable property on the date on which the inventory is converted into, or treated, as a capital asset;
(ii) being jewellery, archaeological collections, drawings, paintings, sculptures, any work of art, shares or securities referred to in rule 11UA, shall be the value determined in the manner provided in sub-rule (1) of rule 11UA and for this purpose the reference to the valuation date in the rule 11U and rule 11UA shall mean the date on which the inventory is converted into, or treated, as a capital asset;
(iii) being the property, other than specified in clause (i) and clause (ii), the price that such property would ordinarily fetch on sale in the open market on the date on which the inventory is converted into, or treated, as a capital asset.”
They shall come into force from April 1, 2019 and shall apply in relation to assessment years 2019-20 and subsequent years.
In order to have wider consultation in this matter, the draft of notification proposed to be issued for amending the Income-tax Rules, 1962 has been uploaded on www.incometaxindia.gov.in. Stakeholders are requested to submit their comments/ suggestions on the draft notification by May 14, 2018 at the e-mail address firstname.lastname@example.org.