23 October 2012
An individual is a share holder along a overseas corporate body and running a private limite company.
Now the individual has agreed buy the shares of the overseas corporate body and agreement has been entered.
Before remitting the money TDS u/s 195 is to be remitted. since the individual has no statutory obligation to get a TAN number what are the possibilities by which the amount can be transferred to the govt acct?
Is remittance of the TDS amount say 20.6% or 30.9% to the PAN of the overseas corporate body be sufficient proof of discharging provison u/s 195? (overseas corporate has a valid PAN under Indian Incom tax).
This is a case of transfer of share from Non Resident to Resident. In such cases share pricing is done on Cash Discounted Flow Method or if quoted on any stock exchange then market value is considered. Certificate from CA is required.
Then FC TRS procedure is to be followed with your bank. On perusal of documents bank will accept your request and money shall be transferred to the seller of shares.
After it share transfer process will be taken.
As the amount you will pay will be cost of shares so TDS no where please.
However, the bank processing FC TRS will take care of INCOME TAX on profit on sale of shares.
Your point 2 is valid but I said so in other words. I never said that Bank is responsible for deposit of TDS. All that I said Bank will take care of TDS rules before approving FC TRS - it naturally means that Bank will advise the buyer to deposit TDS.
The value per share is only to be done on Cash Discounted Fund Method as prescribed by RBI if shares are not quoted on any stock exchange and if quoted then prevailing market price is to be taken up. As per my personal experience Income Tax Authorities will not consider section 56. However, I T Authority will take care that Income Tax on Profit earned by foreign seller lands in Govt treasury.
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