Section 56 2 viib Valuation Report in Andaman and Nicobar Islands
Last updated: 17 Oct 2026
Quick Answer: Section 56(2)(viib) angel tax does not apply from AY 2025-26 onward. Virtual Auditor assists businesses in Andaman and Nicobar Islands with pending Section 56(2)(viib) scrutiny for AY 2024-25 and earlier. For new transactions, we assess Rule 11UA / Section 56(2)(x) valuation requirements and FEMA pricing separately, where applicable; the abolition of angel tax does not remove those requirements.
Compliance Information
ROC: ROC Chennai. Pincode: 744101.
Indicative Fee Structure
| Service | Fee |
|---|---|
| Angel Tax Valuation | Starts from ₹35,000 + govt fees |
| Book a Consultation | 30 minutes, no obligation |
Frequently Asked Questions
Which Registrar of Companies handles filings for a company in Andaman & Nicobar Islands?
ROC Chennai has jurisdiction over companies with a registered office in Andaman & Nicobar Islands. Virtual Auditor files SPICe+, PAS-3, SH-7 and annual returns with that office on your behalf.
What stamp duty applies to a share transfer in Andaman & Nicobar Islands?
Stamp duty on a transfer of shares is 0.015% of the consideration under Article 62 of Schedule I to the Indian Stamp Act, 1899, as amended with effect from 1 July 2020; the rate is the same in every state, including Andaman & Nicobar Islands. Stamp duty on the share purchase agreement itself follows the Indian Stamp Act, 1899.
Do you have an office in Andaman & Nicobar Islands?
No. Andaman & Nicobar Islands is served remotely from our Chennai head office: documents are exchanged online, filings are made on the MCA, GST and income-tax portals, and meetings are held by video or at that office by appointment.
Which valuation rule applies to my transaction and period, including any historical assessment?
It depends on the transaction and the tax year. Share issues made up to 31 March 2024 may still be examined under the old angel-tax provision, section 56(2)(viib), with value under Rule 11UA(2): net asset value or a merchant banker’s DCF, at the company’s option. Share issues from 1 April 2024 are outside angel tax. Shares received for less than their fair market value are taxed in the recipient’s hands (section 56(2)(x)), using the formula in Rule 11UA(1), and the seller may be taxed on fair value under section 50CA. From tax year 2026-27, the Income-tax Act, 2025 and the Income-tax Rules, 2026 apply, so the corresponding provisions must be cited. We match each transaction to its period and rule and say who must sign the report.
Angel Tax Valuation Report in Andaman and Nicobar — Section 56(2)(viib)
Andaman and Nicobar combines tourism, fisheries, and government services activity. A defensible valuation report can prevent a 30%+ tax addition; a weak report invites assessment, CIT(A), and ITAT proceedings stretching 5-7 years.
Rule 11UA(2) — DCF or NAV-FMV
For most Andaman and Nicobar startups, DCF is the natural method, but the report must withstand the AO's predictable challenges: reasonableness of revenue projections, cost growth assumptions, terminal growth rate, and discount rate.
What Makes a DCF Defensible
(c) WACC computation using CAPM with India-specific equity risk premium (6.5-7.5%) and beta sourced from listed comparable peers — typically 12-18% for early-stage businesses, 14-20% for venture-stage. (d) Sensitivity table showing valuation under WACC ±1% and terminal growth ±0.5%. (e) Cross-check with comparable transactions and trading multiples to triangulate the DCF output.
The Six-Step Defence Pack
For every Section 56(2)(viib) valuation we issue, the supporting file includes: (1) board-approved business plan with sign-offs; (2) industry comparable analysis with peer trading and transaction multiples; (3) WACC build-up with all inputs sourced and dated; (4) DCF model with full sensitivity matrix; (5) NAV-FMV cross-check; (6) historical actuals-vs-projections reconciliation. This pack is what the AO sees in any future scrutiny and what a CIT(A)/ITAT bench would review.
DPIIT-Recognised Startup Exemption
DPIIT-recognised startups can claim exemption under Section 56(2)(viib) explanatory memorandum (subject to conditions including aggregate paid-up capital + share premium not exceeding ₹25 crore, and investor undertaking conditions). The exemption is opt-in and requires Form 2 declaration. Andaman and Nicobar eligible startups often miss the Form 2 filing window, defaulting back to standard Rule 11UA(2) compliance.
Foreign Investor Allotments — Different Rules
Section 56(2)(viib) does not apply to allotments to non-residents. But for mixed-domicile rounds, both regimes apply concurrently and the pricing must satisfy both — a single valuation report typically addresses both standards.
Why CA V. Viswanathan and Virtual Auditor for Andaman and Nicobar?
Virtual Auditor is led by CA V. Viswanathan — FCA, ACS, CFE, and IBBI Registered Valuer (IBBI/RV/03/2019/12333) — with 14+ Years (Since 2012) of practice across direct tax, indirect tax, transfer pricing, valuation, FEMA, IBC, and forensic accounting. Engagements for Andaman and Nicobar clients are scoped on fixed-fee terms wherever possible, with a named partner owner and full documentation discipline that withstands tax assessments, CIT(A)/ITAT proceedings, NCLT scrutiny, and AD-Bank inspections. Offices in Chennai, Bangalore, and Mumbai serve clients across Andaman and Nicobar and pan-India, with all engagements running on secure document-room workflows and weekly status updates.
Get Started — Free 30-Minute Consultation
To discuss your specific Andaman and Nicobar requirement, call +91 99622 60333 or email support@virtualauditor.in. We will provide a clear scope, timeline, and fixed-fee quote within 24 hours of the consultation. References from comparable engagements available on request, subject to client confidentiality.
Section 56(2)(viib) Practice Considerations in Andaman and Nicobar Islands
For startups and closely held companies in Andaman and Nicobar Islands, the Section 56(2)(viib) computation under Rule 11UA(2) interlocks with three local touchpoints: assessing-officer charge under ITAT Kolkata appellate jurisdiction, AD-bank reporting under SBI Port Blair is the principal AD-I; complex FEMA filings funnel via Kolkata or Chennai, and the FEMA pricing regime where any non-resident subscriber is on the cap table. Stamp duty on the underlying allotment instruments follows the Andaman and Nicobar Islands schedule — Indian Stamp Act applies (no separate UT schedule) — which adds up materially on large authorised-capital rounds.
The economic mix of Andaman and Nicobar Islands runs across tourism, small-scale agro-processing, fisheries — sectors that consistently dominate the regulatory case-load and the profile of the engagements we field from this jurisdiction. There is no notified SEZ in the state. On the AD-Bank side, SBI Port Blair is the principal AD-I; complex FEMA filings funnel via Kolkata or Chennai.
A&N enjoys 100% income-tax exemption for indigenous-tribal members under Section 10(26AAA) and is the only Indian UT astride the strategic Malacca Strait shipping route — a niche advantage for marine-services ventures.
Choice of Valuation Method — Andaman and Nicobar Islands Sector Context
The DCF methodology is almost always the operationally correct choice for early-stage and growth companies in Andaman and Nicobar Islands's dominant sectors — particularly where the underlying business is not yet profitable but has identifiable revenue ramp. For companies in heavy-asset sectors prevalent in Andaman and Nicobar Islands (e.g. fisheries), an NAV cross-check is essential because the DCF and NAV will diverge, and the assessing officer typically anchors on whichever lower figure supports a Section 56(2)(viib) addition.
Recent Assessment Patterns under ITAT Kolkata
From our practice across ITAT Kolkata appeals, the most common reasons that 56(2)(viib) additions are made — and either survived or struck down on appeal — are: (a) inadequate documentation of the projected cash-flow assumptions (Income Tax Officer challenge under Rule 11UA(2)(b) explanation); (b) absence of comparable-company cross-check in the valuation report (a soft requirement under best-practice but heavily relied on by CIT(A)); (c) cap-table inconsistency with the FC-GPR filing where a non-resident is on the round — this triggers parallel FEMA enquiry and erodes the 56(2)(viib) defence. We standardise our valuation reports to address all three explicitly.
FEMA Pricing Interaction for Andaman and Nicobar Islands Cap Tables with Non-Residents
Where the round includes a non-resident subscriber, the NDI Rules, 2019 (Rule 21) require the issue price to be at or above the fair value determined under any internationally accepted pricing method and certified by a Chartered Accountant, a SEBI-registered Merchant Banker or a practising Cost Accountant — and the FC-GPR filing within 30 days of allotment must reference the supporting valuation. For Andaman and Nicobar Islands-based companies, the AD-bank channel becomes the operational reporting loop: typically SBI Port Blair is the principal AD-I. The Rule 11UA(2) report and the FEMA pricing certificate must be internally consistent — divergence between the two is a frequent ITAT/HC observation.
Engagement — Andaman and Nicobar Islands Coverage
Section 56(2)(viib) valuation reports we issue for Andaman and Nicobar Islands-based companies include: scope-and-purpose memo, valuation date, Rule 11UA(2) DCF computation with explicit terminal-value sensitivity, NAV cross-check, comparable-company benchmark, FEMA-pricing reconciliation where applicable, and an audit-defence appendix mapping each assumption to contemporaneous documentation. Reports are signed under IBBI Registered Valuer credentials (IBBI/RV/03/2019/12333) where required by statute, and supported through assessment, CIT(A), and ITAT proceedings under ITAT Kolkata. Free 30-minute consultation: +91 99622 60333.
Andaman & Nicobar Islands: compliance facts for section 56 2 viib valuation report
The Andaman and Nicobar Islands have a tourism, fisheries and government-services economy centred on Port Blair, with special incentives for island industries and a small base of hospitality and shipping companies. Company matters are routed through Chennai and Kolkata: the Calcutta High Court's Port Blair circuit bench hears writs, and NCLT and ITAT matters go to Kolkata. For section 56 2 viib valuation report this means the company’s filings go to ROC Chennai and tribunal matters to NCLT Kolkata; where a non-resident invests, the price is also checked against the FEMA pricing rules.
Which authorities handle section 56 2 viib valuation report for a business in Andaman & Nicobar Islands?
| Registrar of Companies | ROC Chennai |
|---|---|
| NCLT bench | NCLT Kolkata |
| Stamp duty on share transfer | 0.015% of consideration (Indian Stamp Act, 1899, Schedule I, Art. 62 as amended w.e.f. 1 Jul 2020 — uniform across India) |
| High Court | Calcutta High Court (Port Blair Circuit Bench) |
| Startup nodal agency | Andaman & Nicobar Administration — Directorate of Industries |
| Nearest Virtual Auditor office | Chennai head office — G-131, Ground Floor, Phase 3, Spencer Plaza Mall, Anna Salai, Chennai 600002 (about 1,636 km by road from Andaman & Nicobar Islands) |
Andaman & Nicobar Islands companies file with ROC Chennai; writ remedies lie before the Calcutta High Court (Port Blair Circuit Bench); company-law and insolvency matters go to the NCLT Kolkata.
Statutory references for this service are on the national section 56 2 viib valuation report page: https://virtualauditor.in/section-562viib-valuation-report
What has changed in the law — reviewed October 2026
- Income-tax Act, 2025 is in force from 1 April 2026; the section numbers on this page are those of the Income-tax Act, 1961, which continues to govern assessment years up to 2026-27.