Capital Gain on sale of Share of Company located outside India

This query is : Resolved

varun bhakkad (Querist)
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13 February 2023 We seek a consultation/opinion for the indirect transfer of shares under the Indian Income Tax Act.

The transaction description is as follows.

1. Holding company (USA Based) is getting sold
2. Shares of a Subsidiary Indian company will change ownership because of the above transactions (Indirect transfer of shares)
3. The company as a whole does not derive any significant value from the Indian company.

We are looking for an opinion on capital gain exposure on this transaction and the tax compliances required in this case.

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)
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14 February 2023 Deeming Provision.
Section 9 of the Act further extends this scope by deeming certain incomes to arise in India. Capital gains that would be deemed to arise in India under Section 9 would be all income arising, whether directly or indirectly, through the transfer of a capital asset situate in India. It envisages taxability in a case where income may arise outside India due to transfer happening outside India, but is still deemed to arise in India if the capital asset transferred is situated in India.