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Capital gain on transfer of share

CA Aspirant (CA) (1459 Points)

19 September 2020

company A situated in America having subsidiary company B in India company A's member is now selling its 20% stake to company C which is also situated in US, now capital on such transfer will be taxable in which country and at what rate??

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6 Replies

Sri Ram (46 Points)
Replied 20 September 2020

Hi,
Transfer from a holding company to 100% owned subsidy is not regarded as transfer.
but in your case taxability will be in accordance with DTAA( double taxation avoidance agreement) between other countries and india.
Please, check DTAA agreement between US and india.

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CA Aspirant (CA) (1459 Points)
Replied 20 September 2020

But here transfer is taking place from holding company in USA and another company C in USA

Sri Ram (46 Points)
Replied 20 September 2020

Hi,
then obviously taxability is applicable with US laws

CA Aspirant (CA) (1459 Points)
Replied 20 September 2020

How it could be taxable then??

Sri Ram (46 Points)
Replied 20 September 2020

First I thought the transfer is from US company to Indian subsidy, that was a mistake.
Since, transfer is from one US company to another US company, It will be taxable under that country law.
If any transfer or any money comes into india by any way from those companies, it will be treated under DTAA

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CA Aspirant (CA) (1459 Points)
Replied 20 September 2020

Thank you so much Sir