Madhu Mittal (Director) 04 March 2015

Share forfeited amount taxable or not in fy 01.04.2015 to 31

Respected Sir,

In Direct Taxes code there was a provision that amount of forfeiture of shares will be taxed at the hand of company which forfeits the shares.

Now DTC will not be applicable from 01.04.2015 to 31.3.2016.

Let me know whether the provision that amount of forfeiture of shares taxable has been included in the present Budget or not.

In another words, whether it makes any difference at the hand of company which forfeits the shares from the point of income tax

if share are forfeited in this financial year i.e 01.04.2014 to 31.03.2015 or in next financial year i.e. 01.04.2015 to 31.3.2016.

Other formalities are complete from the point of view of companies act if company decided to forfeit the shares before 31.3.2015, i.e.warning notice of forefeiture has already given in Febuary 2015.

But it will be easier for company to reissue them in same financial year if shares forfeited in next financial year i.e. 01.04.2015 to 31.3.2016.

Thanks and Regards,

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2 Replies

(Guest)

Your query is just like an academic query like a law school student. Better post the real problem, if you or your company is having.

Madhu Mittal (Director) 05 March 2015

Respected Sir,

This is a real problem to be solved by this query. The option company having today is, it can forfeit the shares which were not paid despite call and forfeiture warning notice in this fy 2014-15, at the same time not liable to income tax as per act for fy 2014-15 for the amount it forfeited from shareholders already paid.

Now new bill has come for fy 2015-16, so the company wants to know whether it can postpone forfeiture of shares to be forfeited in fy 2016-16 from the point of income tax and whether the amount of forfeiture would be taxable as provide in Direct Tax code though the same was not impliemented.

Thanks for attending my query,

waiting for your response,

With regards,