Mandatory Valuations in India (2026): When a Valuation Is Legally Required

Mandatory valuations are asset, share, or business valuations that Indian law requires a company to obtain from a qualified, independent valuer — most often under the Companies Act 2013, the Insolvency and Bankruptcy Code (IBC) 2016, SEBI regulations, the Income Tax Act, FEMA, and the Indian Accounting Standards (Ind AS). They are triggered by specific events — issuing or buying back shares, mergers and acquisitions, insolvency, impairment testing, and annual financial reporting — and, for most statutory purposes, must be signed by an IBBI-Registered Valuer.

Ind AS makes valuation a recurring reporting obligation, not a one-off. The core standards:

Ind AS 113 – Fair Value Measurement. The master standard that defines how fair value is measured (the exit-price concept and the Level 1/2/3 hierarchy). Every other fair-value requirement below applies Ind AS 113’s methodology.

Ind AS 36 – Impairment of Assets. An asset is impaired when its carrying amount exceeds its recoverable amount — the higher of Fair Value Less Costs of Disposal (FVLCD) and Value in Use (VIU). Goodwill and indefinite-life intangibles must be tested for impairment annually, even with no visible trigger.

Ind AS 38 – Intangible Assets. Governs recognition and measurement of patents, trademarks, brands and similar assets, including choosing the cost model or the revaluation model, and valuing intangibles acquired in a business combination.

Ind AS 103 – Business Combinations. Requires a Purchase Price Allocation (PPA) — identifying and fair-valuing the assets and liabilities (including previously unrecognised intangibles) acquired in an acquisition.

Ind AS 40 – Investment Property. In India the cost model is mandatory for measurement, but fair value must still be disclosed — so a valuation is required either way.

Ind AS 109 – Financial Instruments. Loans, investments and derivatives are measured at fair value on the measurement date, with classification (amortised cost, FVOCI, FVTPL) driving the treatment.

Companies Act 2013 – Section 247 created the Registered Valuer regime (governed by the Companies (Registered Valuers and Valuation) Rules, 2017). A registered valuer is required for, among others:

• Section 62(1)(c) — further/preferential issue of shares
• Sections 230–232 — compromises, arrangements, mergers and amalgamations
• Section 236 — purchase of minority shareholding (squeeze-out)
• Section 192 — non-cash transactions involving directors

IBC 2016. During a Corporate Insolvency Resolution Process, two registered valuers independently determine the fair value and liquidation value of the corporate debtor (CIRP Regulations 27 and 35).

SEBI. Preferential issues, delisting, and related-party transactions of listed entities require valuations under SEBI (ICDR) and related regulations.

Income Tax Act – Rule 11UA. Governs valuation of unquoted shares (e.g. DCF or NAV, certified by a Merchant Banker) for various tax purposes, including Section 56(2)(x).

FEMA. Any issue or transfer of shares between a resident and a non-resident must be priced using an internationally accepted methodology, certified by a registered valuer, CA, or merchant banker.

The angel tax under Section 56(2)(viib) was abolished from FY 2025-26 (1 April 2025) for all investor classes via the Finance Act 2024. This does not end the need for valuations. Fair-value certification is still mandatory for FEMA pricing on cross-border deals, transfer pricing, Rule 11UA for other tax provisions, and to defend legacy angel-tax assessments (pre-FY 2025-26 years can still be reopened). If anything, clean, defensible valuations remain the best protection against reassessment.

• IBBI-Registered Valuers — required for valuations under the Companies Act and IBC, across the asset classes of Securities/Financial Assets, Land & Building, and Plant & Machinery.
• SEBI-registered Merchant Bankers — required for certain Income Tax (Rule 11UA DCF) and FEMA certifications.
• A valuation signed by an unqualified party for a statutory purpose can be rejected by regulators or auditors and expose directors to compliance risk.

Non-compliance can mean qualified audit opinions, rejected filings, penalties under the Companies Act, disputes during due diligence that derail a deal, and reopened tax assessments. A defensible, standards-compliant valuation report is the evidence auditors and regulators rely on for a true and fair view.

Need a statutory or financial-reporting valuation?

RNC’s IBBI-Registered Valuers issue certified reports compliant with Ind AS, the Companies Act, IBC and SEBI — accepted by auditors, regulators and counterparties.

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1. What are mandatory valuations in a company?

Valuations that Indian law requires for events like share issues, M&A, insolvency, impairment testing and annual financial reporting — typically signed by an IBBI-Registered Valuer.

2. When is a valuation legally required in India?

When issuing shares at a premium, during mergers or acquisitions, in insolvency (CIRP), for minority buyouts, for impairment or revaluation under Ind AS, and for resident–non-resident transactions under FEMA.

 3. Who can conduct a mandatory valuation?

An IBBI-Registered Valuer for Companies Act and IBC purposes; a SEBI-registered Merchant Banker for certain Income Tax and FEMA certifications.

4. Is a valuation still needed after angel tax was abolished?

Yes. Despite the abolition of Section 56(2)(viib) from FY 2025-26, valuations remain mandatory for FEMA pricing, transfer pricing, other tax provisions, and to defend legacy assessments.

5. Which Ind AS standards require valuations?

Chiefly Ind AS 113 (fair value measurement), 36 (impairment), 38 (intangibles), 103 (business combinations), 40 (investment property) and 109 (financial instruments).

6. What is the difference between fair value and liquidation value under IBC?

Fair value is the estimated realisable value in an orderly transaction; liquidation value is the estimated realisable value if assets were sold on the insolvency commencement date. Both are determined by two registered valuers during CIRP.