Buy back of shares by foreign wos entity

This query is : Resolved

Guest

Guest (Querist)

16 September 2011 Please see the following and do the needful :

Foreign company, which is WOS of an Indian Company.

Now the foreign company proposes to buy back the shares held by Indian company.

Query

Indian company purchased the shares from the foreign company at $1 each two years back.

Now, the consideration to be received by the Indian company from the foreign company for the said buy back offer is
$1.07 per share.

Whether Indian company shall suffer Capital Gains Tax or the said transaction shall result in Foreign Exchange Fluctuation (Foreign Exchange Gain).

Ans : ...............

I shall wait for suitable reply on the above query.

C A S.S.Agarwal, M.Com.,LL.B,

C A S.S.Agarwal, M.Com.,LL.B, (Expert)
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18 September 2011 Yes the Indian company shall be liable for CG.

As regards FEF it depends when the cheque is received and when it is deposited in the bank. The cheque amount may go up or down on the date of credit in the bank account.