Applicablity on tds
This query is : Resolved
28 October 2025
Dear Learned professional,
kindly advise if resident company purchase shares from foriegn shareholder, while making payment by bank - tcs/tds to be deduction.
kindly advise
kindly advise if resident company purchase shares from foriegn shareholder, while making payment by bank - tcs/tds to be deduction.
kindly advise
29 October 2025
If the shares being sold are shares of an Indian company, then as per Section 9(1)(i), capital gains arising from their transfer are deemed to accrue in India.
Therefore, the consideration paid to the foreign shareholder is taxable in India, and TDS under Section 195 applies.
Since the actual gain amount may not be known to the buyer, the buyer often applies to the Assessing Officer under Section 195(2) or obtains a certificate from the foreign seller under Section 197 / TRC (Tax Residency Certificate) to determine the correct TDS rate.
Therefore, the consideration paid to the foreign shareholder is taxable in India, and TDS under Section 195 applies.
Since the actual gain amount may not be known to the buyer, the buyer often applies to the Assessing Officer under Section 195(2) or obtains a certificate from the foreign seller under Section 197 / TRC (Tax Residency Certificate) to determine the correct TDS rate.
29 October 2025
TCS under Section 206C or 206C(1H) is not applicable to this transaction.
TCS provisions typically apply to sale of goods or foreign remittances by authorized dealers—not on share purchase from non-residents.
TCS provisions typically apply to sale of goods or foreign remittances by authorized dealers—not on share purchase from non-residents.
29 October 2025
Long-term capital gains arising from the transfer of the following assets as per Section 115E:
Shares of an Indian Company
Debentures and deposits of a Public Company in India
Securities issued by the government .... rate 12.5%
Rate applicability may also depend on DTAA provisions between India and the payee’s country.
Shares of an Indian Company
Debentures and deposits of a Public Company in India
Securities issued by the government .... rate 12.5%
Rate applicability may also depend on DTAA provisions between India and the payee’s country.
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