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URGENT-Tax liability

21 February 2011

Fact of the case:

Two Indian residents formed a company in British Virgin Island (BVI Co). This company owns a property in United Kingdom.

Issue:

What will be the tax implications on the BVI Co if it sells property held in UK (Refer DTAA b/w UK & Virgin Island)?
What will be the treatment of the rental income earned from the property? Also can it be set off against the interest paid on loan taken to acquire property.
What will be the tax treatment in the hands of resident Indians if the company BVI Co is sold?

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1 Replies

Anila (Article Assistant) (177 Points)
Replied 21 February 2011

Hi Shweta:

BVI co-Foreign comapny

As per me If the property is in the company name then will be taken to companies account and no liability on ownersof the company.

Rental income if taken in the name of company no tax liability in India, if it is in the name of owners and accounted in there personal account then tax liability occurs in India

If the company is sold the income from the sale of company which personally belongs to residents are taxable in India.