FEMA Valuation Certificate for Share Transfer | FC-TRS Guide 2026

It is a valuation certificate that states the fair value of a company’s shares when a resident of India transfers those shares to a non-resident. It confirms the transfer price complies with FEMA pricing guidelines, which require the resident to receive at least the fair value.

Under FEMA, when shares move from a resident to a non-resident, value effectively leaves India. To protect the resident and the economy, the sale price must not be less than the fair value determined by an authorised professional using an accepted valuation methodology.

For FEMA purposes, a Chartered Accountant, a SEBI-registered Merchant Banker, or a practising Cost Accountant can certify the fair value for transfer of unlisted shares from a resident to a non-resident.

Yes. Unlike valuation for preferential allotment under the Companies Act (which needs a Registered Valuer), the FEMA pricing certificate for share transfer can be issued directly by a Chartered Accountant.

For transfer from a resident to a non-resident, the price must be equal to or more than the fair value worked out per any internationally accepted pricing methodology on an arm’s length basis, duly certified by an authorised professional.

The Foreign Exchange Management (Non-Debt Instruments) Rules, 2019 govern pricing and reporting for transfer of shares between residents and non-residents, including the pricing guidelines and Form FC-TRS reporting.

Form FC-TRS is the RBI reporting form filed for transfer of shares between a resident and a non-resident. It is filed on the FIRMS portal through the authorised dealer (AD) bank, with the valuation certificate as support.

FC-TRS is filed for transfer of existing shares between a resident and a non-resident. FC-GPR is filed when a company issues fresh shares to a non-resident. Different forms apply to transfer versus fresh issue.

Yes, when a Chartered Accountant signs the certificate, a UDIN must be generated on the ICAI portal so the AD bank and RBI can verify authenticity.

Any internationally accepted pricing methodology on an arm’s length basis is allowed, commonly Net Asset Value (NAV), Discounted Cash Flow (DCF), or Market/Comparable multiples, appropriate to the company.

For transfer from a resident to a non-resident, the fair value acts as a floor price. The resident must receive at least the fair value; a price below it is a FEMA contravention.

Transferring below the FEMA floor price is a pricing contravention. It can attract compounding proceedings and penalties, and the AD bank may not process the transfer until it is corrected.

For listed shares, pricing generally follows the market price and SEBI guidelines rather than a DCF/NAV valuation. This certificate is mainly relevant for unlisted company shares.

There is no fixed fee. It depends on the company’s size, the valuation method, and the complexity. DCF valuations usually cost more than NAV. Agree the scope and fee in writing beforehand.

The valuation is a professional exercise, so the certificate is signed by the professional after analysis. Documents can be shared digitally and a signed certificate issued, but it cannot be self-generated online.

Under FEMA, the valuation should not be more than 90 days old at the time of the transfer. A valuation older than 90 days generally needs to be refreshed before the deal closes.

Yes. The AD bank can reject or query the FC-TRS if the valuation is missing, stale, below the floor price, unsupported, or if the UDIN or documents are deficient.

Yes. An NRI or other non-resident can acquire shares from a resident, subject to the FDI policy for the sector, the pricing guideline, and FC-TRS reporting.

It depends on the sector. Many sectors are under the automatic route, while some need government approval or have caps. The transfer must fit within the applicable FDI policy.

Audited financials, latest provisional accounts, shareholding pattern, MOA and AOA, projections (for DCF), details of the shares transferred, the share purchase agreement, and a management representation.

By examining audited financials, testing projections and the discount rate for reasonableness, reviewing assets and liabilities, and obtaining a management representation on the data provided.

Section 50CA provides that where unlisted shares are transferred for less than their fair market value, the fair market value is deemed to be the sale consideration for computing capital gains for the seller.

Section 56(2)(x) taxes the recipient if property, including shares, is received for less than fair market value, treating the shortfall as income. It is relevant to the non-resident buyer’s tax position.

Not always. FEMA allows any internationally accepted methodology, while income tax prescribes methods under Rule 11UA/11UAA. The valuations may differ, so both regimes should be checked.

Yes. The resident transferring the shares is liable to capital gains tax in India, computed on the sale consideration (at least the fair value under Section 50CA where applicable).

The non-resident buyer or the transaction may attract withholding tax obligations on the capital gains payable by the resident, depending on the facts. Professional advice is recommended.

Gifting shares to a non-resident is possible in limited cases with RBI approval and subject to conditions; the pricing guideline and tax implications must be carefully examined.

It is the price that would be agreed between unrelated parties acting independently. FEMA requires the valuation to reflect an arm’s length basis to prevent under- or over-pricing.

Yes, subject to FDI policy, the pricing guideline, and FC-TRS reporting. Startups commonly see such transfers during secondary sales and investor exits.

The onus is generally on the resident (whether transferor or transferee) to file FC-TRS through the AD bank within the prescribed timeline, commonly 60 days from the transfer or receipt of funds.

FC-TRS is generally required to be filed within 60 days of the transfer of shares or receipt of consideration, whichever is applicable, through the AD bank on the FIRMS portal.

If facts change or an error is found, a fresh certificate with a new date and UDIN is issued rather than altering the original. Valuations are date-specific.

It is a written confirmation from the company or the parties that the financial data and information provided to the valuer are complete and accurate, supporting the valuation.

Securities are excluded from the definition of goods and services, so GST generally does not apply to the transfer of shares itself.

Yes, but the pricing guideline then works as a cap (the non-resident should not receive more than fair value), and different reporting and tax rules apply to that direction.

Certain acquisitions by NRIs on a non-repatriation basis are treated akin to domestic investment and may have relaxed pricing and reporting, but the specific rules must be confirmed.

Transfer between two non-residents is generally outside the resident-to-non-resident pricing guideline, though reporting and sectoral conditions may still apply.

Yes, especially for DCF, if projections are unrealistic. A defensible, well-documented valuation reduces the risk of disputes under Sections 50CA and 56(2)(x).

Yes. The FEMA-compliant valuation is a standard part of the transaction and FC-TRS documentation relied upon by AD banks and foreign investors.

A single valuation as on the relevant date can support a transaction, but separate documentation may be needed where sellers, dates, or terms differ.

Yes. Where the AD bank or the transaction prescribes a format, the professional certifies within it, provided the conclusions are supported by the analysis and the verified data.

From a Chartered Accountant, SEBI-registered Merchant Banker, or practising Cost Accountant who analyses your financials and issues a FEMA-compliant, UDIN-backed certificate. You may reach our office through the contact link provided.

For unlisted shares, a valuation certificate from a CA, Merchant Banker, or Cost Accountant is required to satisfy the FEMA pricing guideline before the transfer.

For transfer from a resident to a non-resident, the price must not be less than the fair value certified per an internationally accepted pricing methodology.

It is the RBI’s online portal for reporting foreign investment, including filing Form FC-TRS for transfer of shares between residents and non-residents.

Broadly, a person who does not reside in India for more than the prescribed period, including NRIs, foreign nationals, and foreign entities, as defined under FEMA.

No. FEMA allows any internationally accepted pricing methodology on an arm’s length basis; DCF is one option, along with NAV and market approaches.

FEMA allows any accepted methodology, while income tax prescribes methods under Rule 11UA/11UAA. The two valuations can differ and are checked separately.

It deems the fair market value of unlisted shares as the sale consideration for capital gains when they are transferred below fair market value.

Rule 11UAA prescribes how to determine the fair market value of unlisted shares for the purposes of Section 50CA.

Yes, the resident seller is liable to capital gains tax computed on the sale consideration, subject to Section 50CA where applicable.

Withholding obligations can arise on the capital gains involved, depending on the facts and the residency of the parties; professional advice is advisable.

It reports the transfer of shares between a resident and a non-resident to the RBI through the AD bank on the FIRMS portal.

Generally within 60 days of the transfer of shares or receipt of consideration, as applicable.

No. That breaches the FEMA floor price and is a pricing contravention attracting compounding and penalty.

Yes. The sector’s route (automatic or approval) and any caps must be satisfied for the transfer to be permissible.

Under FEMA, the valuation should not be older than 90 days at the time of transfer; beyond that a fresh valuation is generally required.

Yes, subject to the FDI policy and pricing guideline; the direction of repatriation affects reporting and tax.

The valuation certificate, share purchase agreement, consent letters, FIRC/receipt of funds, and a declaration of compliance with pricing guidelines.

A Chartered Accountant, SEBI-registered Merchant Banker, or practising Cost Accountant, using an internationally accepted methodology.

No. Resident-to-non-resident uses fair value as a floor; non-resident-to-resident uses it as a cap, to protect the resident in each case.

The AD bank checks compliance and can query a valuation that is stale, unsupported, or below the floor price before processing the transfer.

A recognised valuation approach such as DCF, NAV, or comparable company multiples, applied on an arm’s length basis.

Yes, Section 56(2)(x) can tax the buyer on the difference if shares are received for less than fair market value.

Yes. The transfer must be reported and must meet the pricing guideline; issuing or transferring at par does not remove the FEMA requirements.

Gifting to a non-resident is allowed in limited cases with conditions and sometimes RBI approval; tax and FEMA implications must be checked.

The authorised dealer bank processes the FC-TRS reporting, checks compliance with pricing and documentation, and interfaces with the RBI.

Yes. Convertible instruments issued or transferred to non-residents must also comply with the pricing guideline at the time of issue or conversion, as prescribed.

Independence must be maintained; a CA providing the valuation should be mindful of conflicts, especially where they also audit the company.

Pricing and reporting rules apply to various non-debt instruments; the specific instrument determines the exact requirement, so it should be checked.

Share transfers are generally a matter between the parties and the board for registration; approvals depend on the articles and any shareholder agreements.

Verify the UDIN on the ICAI portal and confirm the CA’s membership details.