21 October 2007
One of my relative had purchased equity shares of companies in India 15-20 years back ( in Indian Rupees ) when he was an Indian citizen. Few years back he became NRI , opened an NRO saving bank account linked to Dmat account and got the shares dematerialised.
Since he does not have trading account, transferred his shares ( off market )in my demat account which I sold through NSE and credited proceeds to his NRO account.
Would like to seek guidance on tax payable in either case if any.
21 October 2007
IF AN NRI HAS TO TRANSFER HIS SHARES TO A RESIDENT, PRIOR PERMISSION OF RBI IS REQUIRED. HAD IT BEEN A GIFT , NO SUCH APPROVAL IS REQUIRED. BUT IN THE PRESENT CASE THE TRANSFER OF SHARES-OFF MARKET TOOK PLACE FROM THE NRO LINKED DEMAT ACCOUNT OF YOUR NRI FRIEND IN TO YOUR DEMAT A/C AND THEN YOU SOLD THEM. HIS NOT HAVING A TRADING ACCOUNT DOES NOT CHANGE THE CHARACTER OF THE TRANSFER TO A RESIDENT, TRANSFER OF WHICH NEEDS RBI APPROVAL. AS FOR TAX, IT IS YOU WHO SOLD SHARES.IF THERE IS A 12 MONTHS GAP BETWEEN THE DATE OF TRANSFER TO YOU AND YOUR SALE OF THE SHARES, AND SINCE YOU SOLD THROUGH NSE AND PRESUMABLY SECURITY TRANS. TAX IS PAID THERE IS NO TAX ON LONG TERM CAPITAL GAIN OF SHARES . AS MAY KNOW SALE PROCEEDS IN THE NRO A/C ARE NOT REPATRIABLE. SUGGEST PL. VISIT THE BELOW GIVEN TWO WEBSITES FOR MORE USEFUL INFORMATION WHICH IF ANY, YOU MAY NEED WWW.taxworry.com www.nritaxservices.com R.V.RAO
21 October 2007
Share Tranfered means Purchase from your'e releatived if sales the share's within 12 months, the "Short Term Capital Income" This is Taxable, If sales after 1 Year " Long Term Capital" Long Term capital is exempted of Income Tax. (STTR,Service Tax is inculde the Purchase and Sales Price)the Net. Profit is Taxable
21 October 2007
Was not aware about requirement of RBI permission as stipulated for transfer. The shares were purchased by relative long back in Indian Rupees. If RBI's permission was required in this case, please let me know how to regularise that now. Shares were sold with in a couple of months of transfer. Thanks for reply.
CAclubindia
