Fair market value deemed to be full value of consideration in certain cases
[Section-80 as per the Income Tax Act, 2025 (this Act) w.e.f. 1st April, 2026.]
If the consideration received or accruing from the transfer of a capital asset is not ascertainable or is unable to be determined, its fair market value on the date of transfer shall be deemed as the full value of consideration received or accruing as a result of the transfer for the purposes of computing income under the head “Capital gains”.
FAQs on Section 80 of Income Tax Act 2025
1. What does Section 80 of the Income Tax Act, 2025 provide for?
Section 80 provides that if the consideration from the transfer of a capital asset is not ascertainable or cannot be determined, the fair market value (FMV) on the date of transfer shall be deemed as the full value of consideration for computing capital gains.
2. From when is Section 80 applicable?
Section 80 is applicable from 1st April, 2026.
3. Under which head of income is the deemed full value of consideration considered?
It is considered under the head “Capital gains.”
4. What happens if the actual sale consideration is not determinable?
The fair market value on the date of transfer will be taken as the full value of consideration.
5. How is fair market value determined for the purposes of Section 80?
Fair market value is determined as per the applicable rules under the Income Tax Act, 2025 or as prescribed by the government.
6. Does Section 80 apply to all kinds of capital assets?
Yes, it applies to any capital asset where the consideration is not ascertainable or determinable.
7. Can the assessee choose to declare any value in such cases?
No, the fair market value must be adopted as the deemed full value of consideration.
8. Is there any difference in computation if the consideration is partly ascertainable?
If the consideration is partly ascertainable, the specific facts must be examined to determine the application of Section 80.
9. Does Section 80 override the actual transaction value agreed between parties?
Yes, where the actual transaction value cannot be determined, FMV will override.
10. What is the significance of “date of transfer” in Section 80?
The fair market value must be taken as on the date of transfer to compute capital gains.
11. What types of transfers might trigger the application of Section 80?
Transfers like barter transactions, exchanges without a clear monetary value, or transfers for non-monetary consideration may trigger Section 80.
12. Is Section 80 applicable to both short-term and long-term capital gains?
Yes, it is applicable irrespective of whether the gain is short-term or long-term.
13. If FMV is later disputed, who determines the correct value?
The Assessing Officer may determine the FMV based on evidence or refer the matter to a valuation officer if necessary.
14. What if the assessee fails to disclose the fair market value properly?
The Assessing Officer may recompute the income, and penalties or adjustments may be applicable.
15. Are there specific valuation rules prescribed for applying Section 80?
Yes, the Central Board of Direct Taxes (CBDT) may prescribe valuation methods under the Income Tax Act, 2025.
16. How does Section 80 impact tax planning for asset transfers?
Assessees must substantiate FMV with proper valuation reports when the consideration is not ascertainable.
17. Will Section 80 apply if consideration is deliberately hidden?
If the consideration is not determinable, regardless of the reason, Section 80 will apply.
18. Does Section 80 apply in case of asset transfers without any transaction documents?
Yes, where consideration is not ascertainable from documents or otherwise, FMV will be deemed as full value.
19. How important is proper valuation evidence under Section 80?
Proper valuation evidence is critical to avoid disputes and ensure accurate computation of capital gains.
20. Can an independent valuation report strengthen the assessee’s position under Section 80?
Yes, an independent valuation report can help substantiate the fair market value declared by the assessee.
21. What kind of assets are most commonly affected by Section 80?
Assets involved in barter, swaps, transfers for non-monetary consideration, or assets without an active market.
22. Can intangible assets like goodwill be covered under Section 80?
Yes, if the consideration for transfer of intangible assets cannot be determined, FMV would be deemed as full value.
23. In case of disputes, which authority adjudicates FMV?
The Assessing Officer, based on evidence and applicable rules under the Income Tax Act, 2025.
24. Will the assessee be taxed even if no money is actually received?
Yes, tax will be levied on the fair market value deemed as full value of consideration.
25. How does Section 80 impact charitable trusts or institutions?
If charitable trusts transfer a capital asset and the consideration is not ascertainable, Section 80 will apply for computing capital gains, subject to their applicable exemptions.
26. Is there any grandfathering provision linked to Section 80?
Section 80 does not specifically mention any grandfathering provision.
27. How will FMV be determined if no market exists for the asset?
Special valuation methods or expert valuation reports, as per rules under the Income Tax Act, 2025, will apply.
28. What precautions should be taken by assessees entering into non-monetary asset transfers?
Proper documentation, valuation certificates, and clear disclosure in the return of income should be maintained.
29. Can the FMV determined for Section 80 purposes be different from accounting book value?
Yes, accounting book value and FMV for tax purposes can differ.
30. How should FMV be disclosed in the Income Tax Return (ITR)?
The fair market value deemed as full value should be reported in the Schedule for Capital Gains in the ITR.
31. Does Section 80 require mandatory valuation by a registered valuer?
While not mandatory in every case, obtaining valuation from a registered valuer is advisable to strengthen the assessee’s claim.
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