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Schedule 2, Rule 4 – The Gift Tax Act, 1958

The Gift Tax Act, 1958

 

Sch. II , Rule 4

 

UNQUOTED PREFERENCE SHARES.

 

(1) Subject to the provisions of sub-rule (2), the value of an unquoted preference share in any company shall, –

 

(a) where the preference share is issued before the date on which the gift was made at a rate of dividend of not less than eight per cent, be the paid-up value of such share; and.

 

(b) where the preference share is issued before the said date at a rate of dividend of less than eight per cent, be the adjusted paid-up value of such share.

 

(2) Where no dividend has been paid in respect of an unquoted preference share by any company continuously for not less than three accounting years ending on the date on which the gift was made or, in a case where the accounting year of the company does not end on that date, for not less than three continuous accounting years ending on a date immediately before the date on which the gift was made, the paid-up value or, as the case may be, the adjusted paid-up value shall be reduced –

 

(a) in the case of a non-cumulative preference share, as indicated in the Table below :-

 

Number of accounting years ending on Rate of reductionthe date on which the gift was made or,in a case where the accounting year doesnot end on that date, the number of accounting years ending on a date immediately preceding the date on which the gift was made, for which no dividend has been paid Three years 10% of the paid-up value or theFour years 20% adjusted paid-up value, as Five years 30% the case may be Six years and above,

 

(b) in the case of a cumulative preference share, by one-half of the rates specified in the aforesaid Table.

 

Explanation : For the purposes of this rule, “adjusted paid-up value”, in relation to a preference share, means an amount which bears to the paid-up value of the preference share the same proportion as the stipulated rate of dividend [being the rate of dividend on the preference share specified in the terms of issue of such share, and in a case where such dividend is required to be increased under the provisions of section 3 of the Preference Shares (Regulation of Dividends) Act, 1960 (63 of 1960), the rate of dividend as so increased] on such share bears to the rate of eight per cent.

 

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The Gift Tax Act, 1958

 

Indian Laws – Bare Acts

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