One of my client has a 'C' Corporation in U.S.A. There are external investors and two founder's of the Company both of them are Indian residents (Tax residents). One of the founder's now want to exit and sell his stake to another Indian resident.
The agreement among the three provided that the founder's will be issued shares in installment part of which will vest after one year. Now, one year has ended and accordingly shares vest to both the founders.
Questions -
1) Sale of shares of a U.S company by an Indian Resident to another Indian resident will give rise to capital gain in U.S.A?
2) Being R.O.R, will the income to Founder be taxable in India as capital gains in India?
3) As per the provisions of the DTAA, will the founder get any benefit (Capital gain in one country, India or USA or will he get tax credit as per the provisions of the DTAA).
4) If the shares vested to him last month, when will the holding period start? Will it start from date of issue of share by the company or will it start from the date the option was given to the employee i.e an year back?
Thanking everyone in advance. The query is a little urgent.
Regards
CAclubindia
