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Taxation in hand of Investor Fund

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YK Associates

25 Points Posted on 30 September 2021

Dear Members,

My Client (NRI) has invested Rs.20 Lakhs (Indian Currency) in New Startup and Amount has been repaid by Startup company (Based in Hyderabad) back to my Client amounting to Rs.22.50 Lakhs (Indian Currency)

The Oral Terms were agreed between the My client & Company as under :-

1. Total 10% Stake in Company of which 5% has already been paid by Company and received in Client Bank Account 5% Balance Stake is yet to be received. Now, The situation is my client is demanded for balance 5% Stake based on current valuation of Company as the turnover of the company has been increased.

2. MOU has not been finalized yet between the Company and my Client.

Points for discussion :

1. Applicability of Income Tax in hand of My Client in case of fund received in Indian Currency. and

2. Can we take transfer the fund from Company directly to My Client bank account in Foreign Currency.

Suggestions are welcome from Members.

Thank You

Replies (2)

Quick Summary

An NRI client invested ₹20 Lakhs in an Indian startup and has received ₹22.50 Lakhs back. The situation is complicated by an oral agreement for a 10% company stake, with 5% already received and the remaining 5% now demanded based on current valuation. The discussion aims to clarify the income tax implications for the client on the funds received and explore the possibility of transferring future funds directly to their foreign bank account in foreign currency.