Valuation Report Requirements in India: Statutory Citation Checklist by Law

This is a fast-reference citation checklist. For the full founder/CFO decision walkthrough — including stage-by-stage guidance and common mistakes — see our companion guide, Which Valuation Report Do You Need? A Decision Guide for Founders and CFOs.

Quick answer: Five Indian statutes independently require a valuation report — Companies Act 2013 (Section 247), Income Tax Act 2025 (Rule 57, successor to Rule 11UA), IBC 2016 (Regulations 27 & 35), FEMA (NDI Rules, Rule 21), and Ind AS (36/103/109 for financial reporting). Each has its own trigger transactions, its own prescribed method, and its own authorised signatory — listed section by section below.

1. Companies Act, 2013 — Section 247

Trigger transactions:

• Preferential allotment — Section 62(1)(c) read with Rule 13, Companies (Share Capital and Debentures) Rules, 2014
• Private placement — Section 42 read with Rule 14, Companies (Prospectus and Allotment of Securities) Rules, 2014 (see our detailed post on whether a Registered Valuer is mandatory for private placement)
• Merger / demerger / scheme of arrangement — Sections 230–232 (share exchange ratio; NCLT-facing document)
• Buy-back of shares — pricing support

Not required for: proportionate rights issues to existing shareholders.

Signatory: Registered Valuer registered with IBBI.

2. Income Tax Act, 2025 — Rule 57 (successor to Rule 11UA)

The Income Tax Act, 2025 came into force 1 April 2026. Transactions effective before that date remain governed by the 1961 Act and Rule 11UA of the Income Tax Rules, 1962; transactions from 1 April 2026 onward fall under the 2025 Act and Rule 57 of the Income-tax Rules, 2026 — which retains the same (A+B+C+D−L) × PV/PE formula for unquoted equity shares. Section numbers have changed substantially between the two Acts; confirm current numbering with your tax advisor before citing a specific section. For the full ESOP compliance picture beyond this checklist, see our guide to ESOP scheme design, valuation and tax compliance.

Trigger transactions:

• Issue of unquoted shares at a premium to a resident investor (NAV or DCF method)
• Transfer of unquoted shares below fair market value (deemed consideration for the seller; taxable shortfall for the buyer above the prescribed threshold)
• ESOP exercise by employees of unlisted companies — FMV on exercise date determines perquisite value (see note below; this uses a separate rule from the NAV/DCF share-valuation formula above)
• Slump sale / business transfer (FMV of the undertaking for capital gains allocation)

Signatory: Chartered Accountant (NAV method) or SEBI-registered Category I Merchant Banker (DCF method), for share issue/transfer valuations.

ESOP perquisite FMV is a separate rule. For unlisted companies, ESOP perquisite value on exercise is governed by Rule 15 of the Income-tax Rules, 2026 (successor to Rule 3(9)(ii) of the 1962 Rules) — not by Rule 57/Rule 11UA. It must be certified by a SEBI-registered Category I Merchant Banker, and the certificate must not be older than 180 days from the date of exercise. This distinction — a different rule, a different signatory, and a validity window — is one promoters get wrong most often.

Note: Angel tax (Section 56(2)(viib)) was withdrawn from Tax Year 2025-26 — this removed the tax charge on the issuing company, not the underlying requirement to determine and document FMV.

3. Insolvency and Bankruptcy Code, 2016 — Regulations 27 & 35

Trigger: Corporate Insolvency Resolution Process (CIRP) and liquidation.

Requirement: The only Indian statute mandating dual valuation. Under Regulation 27, as amended by the IBBI (Insolvency Resolution Process for Corporate Persons) (Amendment) Regulations, 2026 (notified 25 February 2026), the resolution professional appoints two sets of Registered Valuers — one valuer per asset class within each set, with a coordinating valuer designated for each set — to determine Fair Value and Liquidation Value under Regulation 35. Where the two sets’ estimates differ by 25% or more (“significantly different,” as now defined), a third set may be appointed. The average of the two closest estimates is adopted as the final value.

Signatory: Registered Valuer registered with IBBI (two sets, appointed independently, one valuer per asset class within each set).

2026 update: The February 2026 amendment also widened the definition of “fair value” to expressly include intangible assets and synergies, and added documentation requirements for valuation reports. If your CIRP timeline spans before and after 25 February 2026, confirm with your Resolution Professional which version of the regulation governs your appointment. See the IBBI website for the notified text of the amendment regulations.

4. FEMA — Rule 21, Non-Debt Instruments Rules, 2019

Rule 21 of the Foreign Exchange Management (Non-Debt Instruments) Rules, 2019 sets the pricing guidelines described below.

Trigger transactions:

• Issue of shares by an Indian company to a non-resident (FDI) — issue price must not be below fair value (floor)
• Transfer of shares resident↔non-resident (Form FC-TRS) — same floor/ceiling logic applies
• Overseas Direct Investment by an Indian entity — valuation sets the maximum permissible price (ceiling)

Signatory: Chartered Accountant, SEBI-registered Category I Merchant Banker, or practising Cost Accountant, using an internationally accepted pricing methodology on an arm’s length basis.

Validity: 90 days from the date of the certificate. Allotment or transfer delayed beyond that window requires a fresh valuation.

2026 update: Investors from land-bordering countries are subject to the beneficial-ownership screening introduced by Press Note 2 of 2026, which can affect whether the automatic or government approval route applies — resolve this before commissioning the valuation.

5. Ind AS / IFRS — Financial Reporting Triggers

Not filed with a regulator, but tested on statutory audit.

• Ind AS 36 — impairment testing: recoverable amount (Value-in-Use, DCF-based) tested against carrying value whenever impairment indicators exist (see our post on when impairment testing is mandatory under Ind AS 36)
• Ind AS 103 — purchase price allocation: fair value of identifiable assets/liabilities on business combination, as at acquisition date
• Ind AS 109 — fair valuation of financial instruments, including certain preference shares and compound instruments, at initial recognition and subsequently

6. Signatory Matrix — Full Reference Table

Law / Purpose	Trigger	Authorised Signatory
Companies Act, 2013 (S. 247)	Preferential allotment, private placement, merger/demerger, buy-back	Registered Valuer (IBBI)
IBC, 2016 (Reg. 27 & 35, as amended Feb 2026)	CIRP / liquidation	Registered Valuer (IBBI) — two sets, one per asset class
Income Tax Act — NAV method	Share issue/transfer, unquoted equity	Chartered Accountant
Income Tax Act — DCF method	Share issue at premium	SEBI-registered Category I Merchant Banker
ESOP perquisite FMV on exercise (Rule 15, IT Rules 2026)	Unlisted company, employee exercise; certificate valid 180 days	SEBI-registered Category I Merchant Banker
FEMA (Rule 21, NDI Rules)	FDI, FC-TRS, ODI	Chartered Accountant, Category I Merchant Banker, or practising Cost Accountant
Ind AS 36 / 103 / 109	Impairment, PPA, financial instrument FV	Independent valuation professional (audit-tested, not statute-prescribed)

Where a transaction also requires a Merchant Banker’s certificate, that certificate is issued by a SEBI-registered Category I Merchant Banker within the same coordinated engagement.

Frequently Asked Questions

Q1. Does every share issue by a private company require a valuation report?
No. A proportionate rights issue to existing shareholders generally does not require a Companies Act valuation report. Preferential allotments and private placements do.

Q2. Can a Chartered Accountant sign every valuation report a company needs?
No. A CA can certify the NAV-based FMV of unquoted shares under the Income Tax Act, and is also one of the eligible signatories for FEMA valuations. A Registered Valuer registered with IBBI is required for Companies Act and IBC purposes. A SEBI-registered Category I Merchant Banker is required for DCF-based share valuations and, separately, for ESOP perquisite FMV on exercise under Rule 15 of the Income-tax Rules, 2026.

Q3. Is a valuation report still required for share issues to investors now that angel tax has been withdrawn?
Yes. Withdrawal of Section 56(2)(viib) from Tax Year 2025-26 removed the tax charge on the issuing company — it did not remove the requirement to determine and document fair market value, which still matters for Section 56(2)(x), Section 50CA, and Companies Act pricing.

Q4. How long is a FEMA valuation certificate valid?
90 days from its date. A fresh valuation is required if allotment or transfer is delayed beyond that window.

Q5. What is unique about IBC valuation compared with other Indian laws?
It is the only Indian law mandating dual valuation. Following the February 2026 amendment to the CIRP Regulations, the resolution professional appoints two full sets of Registered Valuers (one valuer per asset class within each set) to independently determine Fair Value and Liquidation Value; a third set is brought in only if the two estimates differ by 25% or more.

Q6. Does the Income Tax Act, 2025 change how unquoted shares are valued?
The core mechanics are unchanged — Rule 57 carries forward the Rule 11UA formula. What changed is section numbering and the effective date: pre-1 April 2026 transactions use the 1961 Act and Rule 11UA; transactions from that date use the 2025 Act and Rule 57.

Get a Compliant Valuation Report for Your Transaction

If you are unsure which valuation report your transaction requires — or need more than one prepared as a coordinated engagement — we can help you identify the applicable law, the correct methodology, and the correct signing authority before you proceed.