USA based company selling shares(purchased few years back of Indian Co.) to indian registered trust,arising LTCG.
Q1-How to compute LTCG? Q2-Rate of tax on LTCG? Q3-Would be there any applicability of withholding(TDS) tax,if any then in which section & how much? Q4-Provision of DTAA of USA would be applicable?then how much would be taxable amount? Very-very urgent plz reply soon(posting 4th time)
13 August 2014
1. To compute LTCG : Refer first proviso to section 48
2. Rate of tax: Refer section 112(1)(c)......
[(ii) the amount of income-tax calculated on long-term capital gains [except where such gain arises from transfer of capital asset referred to in sub-clause (iii)] at the rate of twenty per cent; and
(iii) the amount of income-tax on long-term capital gains arising from the transfer of a capital asset, being unlisted securities, calculated at the rate of ten per cent on the capital gains in respect of such asset as computed without giving effect to the first and second proviso to section 48;]]
With regards to treaty, Article 13 prescribes that both the states shall have the right to tax capital gains as per their domestic laws. So the said gains shall be taxed in US as well as India. The credit for taxes paid in India shall be available to your client in US tax filings.
iii. the TDS at the rate as provided in section 112 shall be deducted under section 195.
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