Fair market value - Definition / Legal Terminology - Income Tax

Fair Market Value As per clause (22B) of section 2 of the Income-tax Act, 1961 Fair Market Value , in relation to a capital asset, means - (i) the price that the capital asset would ordinarily fetch on sale in the open market on the relevant date ; and (ii) where the price referred to in sub-clause (i) is not ascertainable, such price as may be determined in accordance with the rules made under this Act ; As per section 55(2)(ac) of the Income Tax Act, 1961 Fair Market Value Means (i) in a case where the capital asset is listed on any recognised stock exchange as on the 31st day of January, 2018 , the highest price of the capital asset quoted on such exchange on the said date: where there is no trading in such asset on such exchange on the 31st day of January, 2018 , the highest price of such asset on such exchange on a date immediately preceding the 31st day of January, 2018 when such asset was traded on such exchange shall be the fair market value; (ii) in a case where the capital asset is a unit which is not listed on a recognised stock exchange as on the 31st day of January, 2018 , the net asset value of such unit as on the said date; (iii) in a case where the capital asset is an equity share in a company which is- (A) not listed on a recognised stock exchange as on the 31st day of January, 2018 but listed on such exchange on the date of transfer; (AA) not listed on a recognised stock exchange as on the 31st day of January, 2018, or which became the property of the assessee in consideration of share which is not listed on such exchange as on the 31st day of January, 2018 by way of transaction not regarded as transfer under section 47, as the case may be, but listed on such exchange subsequent to the date of transfer (where such transfer is in respect of sale of unlisted equity shares under an offer for sale to the public included in an initial public offer); [ Inserted vide Finance (No. 2) Act, 2024 w.e.f. 01.04.2018 ] (B) listed on a recognised stock exchange on the date of transfer and which became the property of the assessee in consideration of share which is not listed on such exchange as on the 31st day of January, 2018 by way of transaction not regarded as transfer under section 47, an amount which bears to the cost of acquisition the same proportion as Cost Inflation Index for the financial year 2017-2018 bears to the Cost Inflation Index for the first year in which the asset was held by the assessee or for the year beginning on the first day of April, 2001, whichever is later; As per section 269A(d) of the Income-tax Act, 1961 In the Chapter XX-A (acquisition of immovable properties in certain cases of transfer to counteract evasion of tax) , unless the context otherwise requires,- fair market value ,- ( i ) in relation to any immovable property transferred by way of sale or exchange, being immovable property of the nature referred to in sub-clause ( i ) of clause ( e ), means the price that the immovable property would ordinarily fetch on sale in the open market on the date of execution of the instrument of transfer of such property ; ( ii ) in relation to any immovable property transferred by way of lease, being immovable property of the nature referred to in sub-clause ( i ) of clause ( e ), means the premium that such transfer would ordinarily fetch in the open market on the date of execution of the instrument of transfer of such property, if the consideration for such transfer had been by way of premium only; ( iii ) in relation to any immovable property transferred, being immovable property of the nature referred to in sub-clause ( ii ) of clause ( e ), means the consideration in the form of money that such transfer would ordinarily fetch in the open market on the date of the transfer, if such transfer had been made only for consideration in money ;