Hi,
I am an NRI. I made an investment in a private company about two years ago. Now I am selling my stake that results in a capital gain. CPA of of the company mentions the following in regards to the transaction.
1. I am required to repatriate the proceeds to complete buyback of my stake since initial investment came through an FDI
2. Taxes on capital gains have to be withheld at the company at 20% rate (on long term gains) before the proceeds can be released to me
Point #1 does not make any sense to me. I'd prefer to reinvest in India so I don't incur repatriation cost at this time. Isn't that possible by law?
Point #2 makes sense to a certain extent since as they seem to collect taxes at the source per section 195. But I am interested in reinvesting in a tax efficient manner, do I still need to pay taxes at the source? in other words, can I not deal with taxes myself depending on how I use the proceeds?
I really appreciate any insights you can offer. Thanks in advance.
CAclubindia
