A company raises funds primarily by issue of shares or accepting loans from various parties. When a private limited or closely held company issues shares , it has a risk of taxation of the amount of premium which is more than the fair market value of the shares. If the company receives loan from parties, then again the tax problem of so called “unexplained cash credit” erupts if unfortunately your case is selected for scrutiny. This post is specially meant for the private limited companies who desires to raise funds from
- Individuals who are related to major share holders of company .
- Other closely held companies