Case law › Notifications › 2021 › Notification No.68/2021 [F. No.370142/16/2021-TPL] / GSR 338(E)

Notification 24 May 2021

Notification No.68/2021 [F. No.370142/16/2021-TPL] / GSR 338(E)

Ministry of Finance

What this is

Notification No.68/2021 [F. No.370142/16/2021-TPL] / GSR 338(E) was published on 24 May 2021. Its subject is Ministry of Finance.

This amends the Income-tax Rules. What it changes is the Rules, not the Act — and a rule can never take away what the section gives.

What it does

Made under section 50B read with section 295 of the Income-tax Act, 1961, the Income-tax (16th Amendment) Rules, 2021 insert a new rule 11UAE after rule 11UAD of the Income-tax Rules, 1962, prescribing how the fair market value of capital assets is computed for clause (ii) of sub-section (2) of section 50B on a slump sale. The fair market value is the higher of FMV1 and FMV2. FMV1 is A+B+C+D-L, where A is the book value of all assets of the undertaking or division other than jewellery, artistic work, shares, securities and immovable property, reduced by income-tax paid less refund claimed and by any asset that does not represent the value of an asset including unamortised deferred expenditure; B is the open market price of jewellery and artistic work on a registered valuer's report; C is the fair market value of shares and securities determined under sub-rule (1) of rule 11UA; D is the value adopted, assessed or assessable for stamp duty on the immovable property; and L is the book value of liabilities excluding paid-up equity capital, amounts set apart for undeclared dividends, reserves and surplus other than those set apart towards depreciation, excess provision for taxation, provisions for unascertained liabilities and contingent liabilities other than arrears of dividend on cumulative preference shares. FMV2 is E+F+G+H, the monetary consideration plus the fair market value of non-monetary consideration — property within rule 11UA(1) valued under that sub-rule, other movable property at its open market price on a registered valuer's report, and immovable property at its stamp duty value. Both are determined on the date of the slump sale, which is also the valuation date for rule 11UA, and "registered valuer" and "securities" carry the meanings given in rule 11U.

Who it reaches

transferors making a slump sale of an undertaking or division
transferees negotiating the consideration for such a transfer
registered valuers and merchant bankers preparing the valuation
assessing officers computing capital gains under section 50B

The provisions it speaks to

Left, the provision of the Income-tax Act, 1961 as the instrument itself names it. Right, the section of the Income-tax Act, 2025 that the department’s own concordance maps it to — which is where the same ground is now covered.

Under the 1961 Act	Now
s.50B	s.77
s.295	s.533

The instrument, as the Board published it

The department publishes this one only as a PDF, so the words below were read out of that PDF by machine. That reading can carry its own mistakes — a misread number, a broken line. Check the signed document before you rely on a figure in it.

MINISTRY OF FINANCE
(Department of Revenue)
(CENTRAL BOARD OF DIRECT TAXES)
NOTIFICATION
New Delhi, the 24th May, 2021
G.S.R. 338 (E).— In exercise of the powers conferred by section 50B read with section 295 of the Income-tax Act, 1961 (43 of 1961), the Central Board of Direct Taxes hereby makes the following rules further to amend the Income-tax Rules,1962, namely:─

1. Short title and commencement.-(1) These rules may be called the Income- tax (16th Amendment) Rules, 2021.

2. In the Income-tax Rules, 1962, after rule 11UAD, the following rule shall be inserted, namely: —

"11UAE.Computation of Fair Market Value of Capital Assets for the purposes of section 50B of the Income-tax Act.

(1) For the purpose of clause (ii) of sub-section (2) of section 50B, the fair market value of the capital assets shall be the FMV1 determined under sub-rule (2) or FMV2 determined under sub-rule (3), whichever is higher.

(2) The FMV1 shall be the fair market value of the capital assets transferred by way of slump sale determined in accordance with the formula –
A+B+C+D - L, where,

A= book value of all the assets (other than jewellery, artistic work, shares, securities and immovable property) as appearing in the books of accounts of the undertaking or the division transferred by way of slump sale as reduced by the following amount which relate to such undertaking or the division, —
(i) any amount of income-tax paid, if any, less the amount of income-tax refund claimed, if any; and
(ii) any amount shown as asset including the unamortised amount of deferred expenditure which does not represent the value of any asset;

B = the price which the jewellery and artistic work would fetch if sold in the open market on the basis of the valuation report obtained from a registered valuer;

C = fair market value of shares and securities as determined in the manner provided in sub-rule (1) of rule 11UA;

D = the value adopted or assessed or assessable by any authority of the Government for the purpose of payment of stamp duty in respect of the immovable property;

L= book value of liabilities as appearing in the books of accounts of the undertaking or the division transferred by way of slump sale, but not including the following amounts which relates to such undertaking or division, namely: —
(i) the paid-up capital in respect of equity shares;
(ii) the amount set apart for payment of dividends on preference shares and equity shares where such dividends have not been declared before the date of transfer at a general body meeting of the company;
(iii) reserves and surplus, by whatever name called, even if the resulting figure is negative, other than those set apart towards depreciation;
(iv) any amount representing provision for taxation, other than amount of income-tax paid, if any, less the amount of income-tax claimed as refund, if any, to the extent of the excess over the tax payable with reference to the book profits in accordance with the law applicable thereto;
(v) any amount representing provisions made for meeting liabilities, other than ascertained liabilities;
(vi) any amount representing contingent liabilities other than arrears of dividends payable in respect of cumulative preference shares.

(3) FMV2 shall be the fair market value of the consideration received or accruing as a result of transfer by way of slump sale determined in accordance with the formulaE+F+G+H, where,

E = value of the monetary consideration received or accruing as a result of the transfer;

F = fair market value of non-monetary consideration received or accruing as a result of the transfer represented by property referred to in sub-rule (1) of rule 11UA determined in the manner provided in sub-rule (1) of rule 11UA for the property covered in that sub-rule;

G = the price which the non-monetary consideration received or accruing as a result of the transfer represented by property, other than immovable property, which is not referred to in sub-rule (1) of rule 11UA would fetch if sold in the open market on the basis of the valuation report obtained from a registered valuer, in respect of property;

H = the value adopted or assessed or assessable by any authority of the Government for the purpose of payment of stamp duty in respect of the immovable property in case the non-monetary consideration received or accruing as a result of the transfer is represented by the immovable property.

(4) The fair market value of the capital assets under sub-rule (2) and sub-rule (3) shall be determined on the date of slump sale and for this purpose valuation date referred to in rule 11UA shall also mean the date of slump sale.

Explanation. -For the purposes of this rule, the expression "registered valuer" and "securities" shall have the same meanings as respectively assigned to them in rule 11U.".

[Notification No.68/2021/F. No.370142/16 /2021-TPL]

KAMLESH CHANDRA VARSHNEY, Jt. Secy. (Tax Policy and Legislation)

Note: The principal rules were published in the Gazette of India, Extraordinary, Part II, Section 3, sub-section (ii) vide number. S.O. 969 (E), dated the 26th March, 1962 and last amended vide notification number G.S.R. 320(E) dated 5th May, 2021.

Uploaded by Dte. of Printing at Government of India Press, Ring Road, Mayapuri, New Delhi-110064 and Published by the Controller of Publications, Delhi-110054.

What it changes

The rule numbers are the 1962 Rules’ own, as the notification names them. The right-hand column is the department’s own mapping into the Income-tax Rules, 2026, which renumbered nearly everything.

Rule of the 1962 Rules	Now, in the 2026 Rules
Rule 11U	rule 56
Rule 11UA	rule 57
Rule 11UAD	rule 58
Rule 11UAE	rule 53

What to watch

The extract's commencement clause is incomplete — the short title survives but the sub-clause fixing the date of coming into force is missing — and the text stops in the note about the principal rules, so the commencement should be taken from the gazette copy.
The charge is on the higher of the two figures, so a valuation of the assets transferred and a valuation of the consideration received are both needed for every slump sale.
In FMV1 the immovable property is taken at its stamp duty value, assessed or even merely assessable, and not at book value.
The exclusions from L are substantial: reserves and surplus are excluded even if the resulting figure is negative, and provisions for unascertained and contingent liabilities do not reduce the value.
The valuation date throughout is the date of the slump sale, and rule 11UA is to be read with that date.

Where you meet it

In the capital gains computation on a slump sale in the return for the year of transfer, in the accountant's report supporting it, and in any assessment testing the fair market value adopted under section 50B(2)(ii).

An example

Ours, not the Board’s: a worked case built from the rule the instrument sets, to show how it falls out.

An undertaking is sold as a going concern for a lump sum. The transferor must work out FMV1 from the undertaking's own assets and liabilities on the date of sale, and FMV2 from the consideration received, taking any immovable property forming part of that consideration at its stamp duty value. The higher of the two is the fair market value for clause (ii) of section 50B(2).

What it names

Rules it names. Rule 11U, 11UA, 11UAD of the Income-tax Rules, 1962. The 1962 Rules were replaced by the Income-tax Rules, 2026, which renumbered nearly everything: a rule number quoted here almost never means the same rule today.

On the same provision

Other instruments in this library that name the same provision of the 1961 Act. They are not necessarily still operative, and a later one may have replaced an earlier one without saying so.

Notification No. 10967 — A notification under section 50B of the Income-tax Act, 1961 25 June 1999
S.O. 499(E) — A notification under section 50B of the Income-tax Act, 1961 25 June 1999
Notification No. 54/2026 [F. No. 370142/15/2026-TPL] / G.S.R. 240(E) — Ministry of Finance 31 March 2026
Notification No. 52/2026 [F.No. 370142/13/2026-TPL] / G.S.R. 233(E) — (Central Board of Direct Taxes) 30 March 2026
Notification No. 141/2025 [F. No. 370142/30/2025-TPL] / G.S.R. 598(E) — Ministry of Finance 1 September 2025
Notification No. 136/2025 [F. No. 370142/29/2025-TPL] / G.S.R 566(E) — Ministry of Finance 21 August 2025

What a notification is. A notification is made under a power the Act itself gives, and within that power it is law — unlike a circular, which only binds the department. Its reach is the reach of the enabling provision and no wider, and the date it carries decides from when it works.

Source: the Income Tax Department’s own published text — its page for this instrument.