Rule 11UA to Rule 57: What Changed?
From 1 April 2026, India's share valuation rule changed its name and its number. Rule 11UA became Rule 57, under the new Income-tax Rules, 2026.
Most of the commentary has focused on the renumbering. That's the least important part. Here's what actually changed underneath, sorted into what's genuinely different, what only looks different, and what stayed the same.
What Genuinely Changed
The DCF option for unquoted equity shares is gone.
This is the single most consequential change, and it's the one most often misattributed to the new Rules. Rule 11UA once offered a choice of methods for unquoted equity shares, with DCF sitting alongside the prescribed formula, available where shares were issued at a premium.
That option was machinery built to serve the tax on share premium. When the Finance (No. 2) Act, 2024 withdrew that tax from assessment year 2025-26, the DCF option fell away with it, a year before the new Rules even arrived. The Income-tax Rules, 2026 have not revived it.
The practical consequence: for unquoted equity shares valued for income-tax purposes, there is now one formula and no alternative.
The balance sheet fallback disappeared.
The old Rule 11U carried an express fallback for a common practical problem — where no balance sheet exists as on the valuation date, use the last one adopted at the annual general meeting. That fallback does not appear in the 2026 Rules.
Since companies close their books annually and share transfers happen year-round, this matters. Financial statements as on the valuation date now generally need to be prepared and certified, rather than relying on last March's accounts.
What Only Looks Different
The numbering. Rule 11U became Rule 56 (the definitions). Rule 11UA became Rule 57 (the methods). Rules 11UAA and 11UAB were absorbed into Rule 57 rather than kept separate. On the triggering side, Section 56(2)(x) became Section 92(2)(m), Section 50CA became Section 79, and Section 28(via) became Section 26(2)(j).
The structure. Rule 11UA was a chain of -clauses pointing to other sub-clauses. Rule 57 now works like a table; you simply locate your assets row and read across. It is easier to navigate. There is no change, in substance.
What Stayed the Same
The formula itself for unquoted equity shares carries forward, including the asset classes pulled out and remeasured, and the exclusions from liabilities that catch people out most often.
The definition of "quoted" still requires three things together: quotation on a recognised exchange, with regularity, from genuine trades. A listed but thinly traded scrip remains unquoted, and that category is wider than most people assume.
The valuation date is still fixed by the rule and still varies by trigger — the day of receipt, transfer, or conversion. Your agreement date and report date remain irrelevant.
The both-sides exposure is unchanged. Transfer unquoted shares below fair value, and the seller's capital gains get recomputed on the substituted figure while the buyer carries the shortfall as income from other sources.
What This Means in Practice
If you commissioned a share valuation before April 2026 and are about to commission another, two things deserve attention. First, if the earlier one used DCF for unquoted equity shares under the income-tax route, that approach is no longer available for this purpose although DCF remains entirely relevant for FEMA pricing, ESOP fair value, and commercial valuation work. Second, check whether your supporting financials actually correspond to the valuation date, since the fallback you may have relied on previously is no longer written into the rule.
Everything else you knew about Rule 11UA largely survives. It just answers to a different number now.
