Taxation of non residents

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CA Satyakam (Querist)

04 April 2015 what will be tax effect where shares in an Indian company is transferred by one non resident to another non resident? if taxable then at what rate?

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)

04 April 2015 It will be taxable based on its classification as long term or short term capital gain.

01 Non Resident are at a disadvantage as against residents as re: LTCG of all assets or STCG of listed shares or Mutual Fund Units as the basic threshold exemption limit is not deductible while computing the tax on said capital gains in case of non-residents.
02 Thus a non-resident will be paying tax on gross amount of said LTCG or STCG including the basic threshold exempt limit of INR 2,50,000.
03 And as such entire LTCG will be taxed at 20% or 10% as the case may be and STCG of listed shares or Mutual Funds Units will be taxed at 15% from the 1st Rupee gain.

CA Kanj Goel

CA Kanj Goel (Expert)

04 April 2015 In my view transaction is covered under the section 47 such that transactions not regarded as transfer hence it should not be taxable in india if the nri is not holding more than 50 % shares of the company. If its more than 50% then section 9 would beapplicable and Iit would be taxable.

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)

05 April 2015 Mr CA Kanj Goel please check sale of shares of Indian company covered u/s 47. It is only bonds and GDRs covered.

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