Sale of Shares of Indian Pvt Ltd

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A Singaporean company, C Pte Ltd, wishes to sell its entire stake in an Indian private limited company to its 100% holding company, G Pte Ltd. The key question is whether C Pte Ltd can sell these shares at face value, which is significantly lower than their calculated market value. This raises considerations around transfer pricing regulations, particularly Section 92 of India's Income Tax Act, 1961, and its applicability to transactions between related foreign entities.

vijay

vijay (Querist)
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13 December 2023 C Pte Ltd is a Singapore registered private limited Co. holding 49999 shares out of 50000 shares of Indian Pvt Ltd company. C Pte Ltd want to sell its entire share ( 49999 ) to its 100% Holding company G Pte Ltd.
Can C Pte ltd sell its share at face value ?? i..e INR 10 per share which is way less than its calculated share value which comes to approx INR 80

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)
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14 December 2023 It ensures that the transaction between ‘related’ parties is at a price that would be comparable if the transaction was occurring between unrelated parties.
The following sections of the Income Tax Act, 1961 apply to international transactions in terms of transfer pricing.

Section 92 of the Income Tax Act, 1961

vijay

vijay (Querist)
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18 December 2023 How section 92 of Income tax Act 1961 will be applicable here ? as sale & purchase is happening between 2 Singapore companies

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)
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19 December 2023 In such a case it will not be applicable.

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