Share transfer by nri to his 100% owned foreign company

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Querist : Anonymous

Querist : Anonymous (Querist)

17 August 2013 What are the tax implication if

a) a non resident investor transfers his individual shareholding in an Indian Pvt Ltd company to his 100% owned company registered out of India.

b) What if he transfers the shares at the same value at which he subscribed these shares at the time of formation of the company in India?

c) Doe she liable for tax against transfer of shares of Indian Pvt Ltd company to his own company (100% owned by him) out of India?

C A S.S.Agarwal, M.Com.,LL.B,

C A S.S.Agarwal, M.Com.,LL.B, (Expert)
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17 August 2013 Now all shares are to be transferred at the market value to be determined by the appropriate authority and all capital gains shall be paid accordingly on the basis of LTCG or STCG on the basis of Indian Income Tax Laws

Querist : Anonymous

Querist : Anonymous (Querist)

19 August 2013 Thank you for reply.

a) What if the Indian Pvt Ltd company was formed 2 months back meaning no business or revenue in books. Can it be considered that face value of the shares is the market value.

b)Second since the transfer of shares is just from Individual to his own 100% owned company is there anything by which it is not considered as transfer to attract capital gain.

CA. Anuj Gupta

CA. Anuj Gupta (Expert)
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28 October 2013 A) The correct method of valuation is DCF method as per FEMA. You can prove in DCF valuation the value of shares at 10/- since the company has not started production.

B) Individual and Company are different entities however if the transfer value and cost are same then there shall be no capital gain.

Anuj
femaquery@gmail.com

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