Rule 57Published

Rule 57: Fair market value methods by asset type

Rule 57 provides a seven-row table of fair-market-value methods. The applicable statutory provision and type of property determine whether to use a transaction value, market price, adjusted asset formula or stamp-duty value.

Official notified Income-tax Rules, 2026

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On this page

Bare law
Match both the statutory provision and asset type
Jewellery and artistic works
Quoted shares and securities
Unquoted equity: the adjusted asset formula
Illustrative unquoted-equity calculation
Other securities and the inventory-conversion rows
Build an auditable valuation file
Key takeaways
Practical checklist
FAQs
Glossary
Official sources

Bare law

Rule 57 - Determination of fair market value
For the purpose of following sections referred to in column B of the Table below, the fair market value of the property of the nature referred to column C shall be determined in the manner provided in column D thereof:
Sl. No Section Nature of Property Manner of determination of Fair Market Value
1 Sections 26(2)(j) and 92. Jewellery (a) The price which such jewellery would fetch, if sold in the open market on the valuation date; or (b) if the jewellery is received by way of purchase from a registered dealer on the valuation date, the invoice value of such jewellery; or (c) if the jewellery is received by any other mode and its value exceeds ₹50,000, the assessee may obtain a report from a registered valuer regarding the price it would fetch, if sold in the open market on the valuation date.
2 Sections 26(2)(j) and 92. Archaeological collections, drawings, paintings, sculptures or any work of art (herein referred as artistic work) (a) The price which such artistic work would fetch, if sold in the open market on the valuation date; or (b) if the artistic work is received by way of purchase from a registered dealer on the valuation date, the invoice value of such artistic work; or (c) if the artistic work is received through any other means and its value exceeds ₹50,000, the assessee may obtain a report from a registered valuer regarding the price it would fetch, if sold in the open market on the valuation date.
3 Sections 26(2)(j) and 92. Quoted shares and securities (a) If the quoted shares and securities are received by way of transaction carried out through any recognised stock exchange, the fair market value of such shares and securities shall be the transaction value as recorded in such stock exchange; or (b) if such quoted shares and securities are received by way of transaction carried out other than through any recognised stock exchange, their fair market shall be– (A) the lowest price of such shares and securities quoted on any recognised stock exchange on the valuation date; and (B) in cases, where on the valuation date, there is no trading in shares and securities on any recognised stock exchange, the lowest price of such shares and securities on any recognised stock exchange on a date immediately preceding the valuation date when such shares and securities were traded on such stock exchange.
4 Sections 26(2)(j), 72 and 92. Unquoted equity shares Fair market value of unquoted equity shares = (A + B + C + D - L) × (PV)/(PE) Where,– A = book value of all the assets as appearing in the books of the company (other than jewellery, artistic work, shares, securities and immovable property) in the balance sheet as reduced by– (a) any amount of income-tax paid, if any, less the amount of income-tax refund claimed, if any; and (b) any amount shown as asset including the unamortised amount of deferred expenditure which does not represent the value of any asset; B = the price which the jewellery and artistic work would fetch, if sold in the open market on the basis of the valuation report obtained from a registered valuer; C = fair market value of shares and securities as determined in the manner provided in this rule; D = the value adopted or assessed or assessable by any authority of the Government for the purpose of payment of stamp duty in respect of the immovable property; and L = book value of liabilities shown in the balance sheet, but not including the following amounts:– (i) the paid-up capital in respect of equity shares; (ii) the amount set apart for payment of dividends on preference shares and equity shares where such dividends have not been declared before the date of transfer at a general body meeting of the company; (iii) reserves and surplus, by whatever name called, even if the resulting figure is negative, other than those set apart towards depreciation; (iv) any amount representing provision for taxation, other than amount of income-tax paid, if any, less the amount of income-tax claimed as refund, if any, to the extent of the excess over the tax payable with reference to the book profits in accordance with the law applicable thereto; (v) any amount representing provisions made for meeting liabilities, other than ascertained liabilities; and (vi) any amount representing contingent liabilities other than arrears of dividends payable in respect of cumulative preference shares; PV = the paid-up value of such equity shares; and PE = total amount of paid-up equity share capital as shown in the balance sheet.
5 Sections 26(2)(j), 72 and 92. Unquoted shares and securities (other than equity shares in a company) which are not listed in any recognised stock exchange The price it would fetch, if sold in the open market on the valuation date and the assessee may obtain a report from a merchant banker or an accountant in respect of such valuation.
6 Section 26(2)(j) Immovable property being land or building or both The value adopted or assessed or assessable by any authority of the Central Government or a State Government for the purpose of payment of stamp duty in the respect of such immovable property on the valuation date.
7 Section 26(2)(j) Any other property other than referred to at Sl. Nos. 1 to 6 above. The price that such property would ordinarily fetch on sale in the open market on the valuation date.

Sl. No	Section	Nature of Property	Manner of determination of Fair Market Value
1	Sections 26(2)(j) and 92.	Jewellery	(a) The price which such jewellery would fetch, if sold in the open market on the valuation date; or (b) if the jewellery is received by way of purchase from a registered dealer on the valuation date, the invoice value of such jewellery; or (c) if the jewellery is received by any other mode and its value exceeds ₹50,000, the assessee may obtain a report from a registered valuer regarding the price it would fetch, if sold in the open market on the valuation date.
2	Sections 26(2)(j) and 92.	Archaeological collections, drawings, paintings, sculptures or any work of art (herein referred as artistic work)	(a) The price which such artistic work would fetch, if sold in the open market on the valuation date; or (b) if the artistic work is received by way of purchase from a registered dealer on the valuation date, the invoice value of such artistic work; or (c) if the artistic work is received through any other means and its value exceeds ₹50,000, the assessee may obtain a report from a registered valuer regarding the price it would fetch, if sold in the open market on the valuation date.
3	Sections 26(2)(j) and 92.	Quoted shares and securities	(a) If the quoted shares and securities are received by way of transaction carried out through any recognised stock exchange, the fair market value of such shares and securities shall be the transaction value as recorded in such stock exchange; or (b) if such quoted shares and securities are received by way of transaction carried out other than through any recognised stock exchange, their fair market shall be– (A) the lowest price of such shares and securities quoted on any recognised stock exchange on the valuation date; and (B) in cases, where on the valuation date, there is no trading in shares and securities on any recognised stock exchange, the lowest price of such shares and securities on any recognised stock exchange on a date immediately preceding the valuation date when such shares and securities were traded on such stock exchange.
4	Sections 26(2)(j), 72 and 92.	Unquoted equity shares	Fair market value of unquoted equity shares = (A + B + C + D - L) × (PV)/(PE) Where,– A = book value of all the assets as appearing in the books of the company (other than jewellery, artistic work, shares, securities and immovable property) in the balance sheet as reduced by– (a) any amount of income-tax paid, if any, less the amount of income-tax refund claimed, if any; and (b) any amount shown as asset including the unamortised amount of deferred expenditure which does not represent the value of any asset; B = the price which the jewellery and artistic work would fetch, if sold in the open market on the basis of the valuation report obtained from a registered valuer; C = fair market value of shares and securities as determined in the manner provided in this rule; D = the value adopted or assessed or assessable by any authority of the Government for the purpose of payment of stamp duty in respect of the immovable property; and L = book value of liabilities shown in the balance sheet, but not including the following amounts:– (i) the paid-up capital in respect of equity shares; (ii) the amount set apart for payment of dividends on preference shares and equity shares where such dividends have not been declared before the date of transfer at a general body meeting of the company; (iii) reserves and surplus, by whatever name called, even if the resulting figure is negative, other than those set apart towards depreciation; (iv) any amount representing provision for taxation, other than amount of income-tax paid, if any, less the amount of income-tax claimed as refund, if any, to the extent of the excess over the tax payable with reference to the book profits in accordance with the law applicable thereto; (v) any amount representing provisions made for meeting liabilities, other than ascertained liabilities; and (vi) any amount representing contingent liabilities other than arrears of dividends payable in respect of cumulative preference shares; PV = the paid-up value of such equity shares; and PE = total amount of paid-up equity share capital as shown in the balance sheet.
5	Sections 26(2)(j), 72 and 92.	Unquoted shares and securities (other than equity shares in a company) which are not listed in any recognised stock exchange	The price it would fetch, if sold in the open market on the valuation date and the assessee may obtain a report from a merchant banker or an accountant in respect of such valuation.
6	Section 26(2)(j)	Immovable property being land or building or both	The value adopted or assessed or assessable by any authority of the Central Government or a State Government for the purpose of payment of stamp duty in the respect of such immovable property on the valuation date.
7	Section 26(2)(j)	Any other property other than referred to at Sl. Nos. 1 to 6 above.	The price that such property would ordinarily fetch on sale in the open market on the valuation date.

Rule breakdown

Match both the statutory provision and asset type

The table’s section column is part of the rule. Some rows cover sections 26(2)(j) and 92, while others also name section 72; the final two rows concern section 26(2)(j).

Do not select a convenient valuation method based only on an asset’s description. Use the applicable parent provision, Rule 56 definitions and the relevant valuation date.

Jewellery and artistic works

The first two rows identify open-market price on the valuation date. They also address purchases from a registered dealer on that date using invoice value, and the ability to obtain a registered-valuer report for other receipt modes where value exceeds ₹50,000.

Keep the purchase date, invoice, dealer status and any valuation report. The invoice route is linked to the stated purchase conditions; it is not a blanket rule that any old invoice fixes current FMV.

Quoted shares and securities

For a transaction through a recognised exchange, the row uses the transaction value recorded there. For an off-exchange receipt of quoted shares or securities, it provides the lowest quoted price on the valuation date and the stated preceding-trading-date treatment when there is no trading on that date.

Retain the transaction evidence, exchange prices and date selection. A closing price or average should not be substituted merely for convenience.

Unquoted equity: the adjusted asset formula

The formula is (A+B+C+D−L)×PV/PE. It separately values the specified asset categories and adjusts the balance-sheet asset and liability components; PV is the paid-up value of the equity shares and PE is total paid-up equity share capital.

The liability exclusions include equity capital, specified dividend amounts, reserves other than depreciation reserves, excess tax provisions, unascertained liabilities and the stated contingent liabilities. Read the complete definitions before using a net-assets figure.

Illustrative unquoted-equity calculation

Hypothetical: the properly adjusted A+B+C+D−L total is ₹1 crore, PV is ₹10 and PE is ₹10 lakh. The formula gives ₹100 for the relevant share. This assumes all asset values, liability exclusions and paid-up capital figures have been correctly established.

The example illustrates the formula only; it does not establish the correct balance-sheet inputs for an actual company or replace the required evidence.

Other securities and the inventory-conversion rows

The specified unquoted non-equity securities use an open-market-price method, with a report from a merchant banker or accountant permitted by the row. For the section 26(2)(j) immovable-property row, the stated stamp-duty value on the valuation date applies.

The last row uses the ordinary open-market price for other property outside rows 1–6 under section 26(2)(j). Do not extend those two inventory-conversion rows to every unrelated property-tax provision.

Build an auditable valuation file

Record the parent provision, applicable row, asset classification, valuation date, accounts and notes, price sources, professional reports and calculation. Explain any adjustments and preserve the supporting documents.

Where another provision expressly adopts or modifies this method, document that link as well. Rule 53, for example, specifies its own slump-sale valuation date when using Rule 57.

Key takeaways

Seven category-specific methods

The property and section columns both matter.

Different share methods

Exchange transaction, off-exchange quotation and unquoted-equity formula are distinct.

Adjusted liabilities

The unquoted-equity formula does not deduct every balance-sheet liability.

Correct date and evidence

Use Rule 56 definitions and any express provision-specific date modification.

Practical checklist

Identify the governing provision, asset type and valuation date.
Apply each formula definition and exclusion.
Keep exchange evidence, invoices, accounts and reports supporting the selected method.

Avoid

Do not use one market-price convention for every share transaction.
Do not substitute unadjusted book net worth for the statutory equity formula.

FAQs

Does every quoted share use a closing market price?

No. The row distinguishes exchange transaction value from the prescribed lowest-price approach for an off-exchange receipt.

Can book net worth alone establish unquoted-equity FMV?

The formula requires the specified asset substitutions, reductions and liability exclusions, plus the PV/PE ratio.

Is a registered-valuer report always mandatory for jewellery above ₹50,000?

The relevant other-receipt limb says the assessee may obtain the report; apply the full row and circumstances rather than converting that wording into a universal mandatory-report rule.

Can the last two rows be applied to every property transaction?

Those rows expressly identify section 26(2)(j). Check the governing provision before using them.

Glossary

PV: The paid-up value of the equity shares in the row 4 formula.
PE: Total paid-up equity share capital shown in the balance sheet.
L: The defined liability component after excluding the items listed in row 4.

Official sources

Official notified Income-tax Rules, 2026 — Notification 22/2026