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Sale of shares from non resident

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Dipjyoti Majumdar

CA in service & CS. dipmaj@

2886 Points Posted on 19 July 2026

Dear Experts

In case of transfer of shares from a non-resident to another non-resident in a indian private limited company, is there any restriction on pricing under FEMA ie is there any floor price.

Please advise.

Regards

CA CS Dipjyoti Majumdar

Replies (2)

Quick Summary

This discussion clarifies pricing regulations for share transfers between non-residents in Indian private limited companies. Generally, FEMA imposes no floor price for transfers between two non-residents on a repatriation basis. However, if the transfer involves a shift to a repatriable basis, FEMA pricing guidelines apply. Crucially, all such transactions should be conducted at Fair Market Value to prevent adverse tax consequences under Indian tax laws, and the necessity of Indian PAN cards for involved parties is also considered.

Aashok Kumar Sharma

Finance/Compliance Consultant

75663 Points Posted on 19 July 2026

For a standard transfer of shares from a Non-Resident to another Non-Resident (both holding on a repatriation basis), there is no floor price or restriction under FEMA. However, if the transfer shifts the holding from a non-repatriable to a repatriable basis, FEMA pricing guidelines will immediately apply. Regardless of FEMA rules, the transaction should still occur at Fair Market Value (FMV) to avoid severe adverse tax consequences under Sections 56(2)(x) and 50CA of the Income Tax Act.

Dipjyoti Majumdar

CA in service & CS. dipmaj@

2886 Points Posted on 19 July 2026

Many thanks Sir.

So, as a corollary, is the selling and purchasing non resident shareholder required to pay capital gain tax in India? And they need to have PAN in India ?

Regards

CA CS Dipjyoti Majumdar