Buy back of shares by foreign entity of India based private limited company

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yogesh vijaykumar shah (Querist)
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16 June 2023 Forign company held 40% stake in Indian Private Limted company. Can this priv Ltd company buy back these shares. If so what will be tax implications in the case of Foreign Company and Indian Pvt Ltd company. Kindly advise with provisons under income tax law

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)
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17 June 2023 Under Section 115QA of the Income Tax Act, any domestic company that buys back its own shares is liable to pay additional income tax on the distributed income at an effective tax rate of 23.296% of distributed income [Rate of tax - 20% (plus surcharge @ 12% plus Health and education cess @ 4%).
Foreign company has to pay 20% capital gains tax.

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