bombay chartered accountants’ society · 2017-07-11 · fmv of b co based on stock exchange...

Bombay Chartered Accountants’ Society

Recent developments in taxation of

capital gains

Pinakin Desai

11 July 2017

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11 July 2017Recent developments in taxation of capital gains

Index

► Notional taxation w.r.t. FMV of unlisted equity shares (Section 50CA)

► Valuation of shares under normative valuation

► Resolving normative valuation of shares under Draft Notification

► Issues under normative valuation

► Normative valuation more than fair value – whether a possibility?

► Valuation of unquoted equity shares – Preference premium

► Transfer of CHC shares by Parent to subsidiary

► Section 195 – WHT on actual or notional consideration for 50CA

► Cost of bonus shares - Shift of base year for indexation from 1981 to 2001


Index

► Amendment to Section 10(38) - Third proviso to section 10(38)

► Background on 10(38)

► Notification on 3rd proviso to 10(38)

► Case study - Acquisition in IPO

► Case study - Acquisition pursuant to merger

► Case study – Gift of shares

► Case study – Inter-se promoter transfer

► Case study – Acquisition pursuant to conversion of company into LLP


Index

► Protocol to India-Mauritius treaty

► Impact of grandfathering under India-Mauritius treaty

► Mauritius and MLI

► Protocol to India-Singapore treaty

► Indirect transfer of India assets

► Case study – Direct transfer v. indirect transfer

► Case study – Impact of dividend distribution


Case studies on Section 50CA


Notional taxation w.r.t. FMV of unlisted shares (S.50CA)

► If sale price of non-quoted shares held as capital asset < prescribed FMV

► FMV deemed as full value of consideration in place of actual consideration

► Extends to all form of unquoted shares - whether equity or preference

► Extends to all categories of assesses

► Quoted share’ means shares traded regularly on RSE and price based on current

transaction in the ordinary course of business

► Transfer of listed shares in overseas jurisdiction may also be covered.

► No relaxation even if transfer among relatives

► No de minimis exemption

► Provision akin/similar to section 50C/43CA:

► Draft Notification for FMV of non-quoted equity shares released for public consultation

► Mechanism to derive FMV of preference shares not prescribed for 50CA

► For 56(2)(x), FMV as certified by accountant or merchant banker


Notional taxation w.r.t. FMV of unlisted shares (S.50CA)

► Per se provision has no impact on

► MAT computation

► Transfer without consideration i.e. where no consideration received or accruing

► Transfer exempt u/s 47 or treaty protected or exempt otherwise

► Recipient of share may suffer gift taxation u/s 56, leading to dual taxation

► Cost step up available u/s 49(4)


Valuation of shares under normative valuationDraft valuation Rule notified under 50CA1

► Under draft valuation rules, all the assets and liabilities of ICo to be taken at book value

except the following assets:

1 Prone to change2 Date of transfer or receipt of consideration

Assets Valuation methodology

Jewellery, work of art Market price as per valuation report

Unquoted Equity

shares

FMV determined in the manner provided under this draft rule

Immovable property Stamp Duty Value

Quoted shares and

securities. (say,

quoted shares held by

CHC)

Transaction value recorded in such stock exchange on date of

transaction of CHC shares

► If share not traded as on valuation date2, lowest price on any RSE

preceding the valuation date


Case Study: Resolving normative Valuation of shares as per Draft Notification3

Facts:

► Promoters hold equity shares in ICo (CHC)

► ICo holds shares of A Co, B Co, foreign listed

company and partnership interest

► LLP owns intellectual property

► B Co is a listed company which owns

immovable properties and shares of CHC

► A Co holds immovable properties

► Foreign List Co principally owns immovable

properties outside India

► Promoters wish to transfer shares of SPV (ICo)

Issue:

► Impact of section 50CA in the hands of

promoters on transfer of non-quoted equity

shares of SPV ?

Immovable

properties +

share of CHC

ICo (CHC)

A Co (CHC)

Equity

shareholders

Immovable

properties

B Co (Listed)

Intellectual

property

LLP Immovable

properties

outside

India

Foreign List

Co

3 Prone to change


Case Study: Resolving normative Valuation of shares as per Draft Notification4

Valuation of shares of ICo based on draft

valuation rule

Book value of assets and liabilities of ICo subject to:

► No valuation mechanism prescribed for valuation

of partnership interest

► No need to open up LLP

► Balance Sheet of B Co not to be opened up

► FMV of B Co based on stock exchange value

on date of transaction

► Book value of shares of A Co to be adjusted by

ICo - Stamp duty value of immovable property

► Foreign listed shares not considered quoted

shares for the purpose of Rule 11UA

► Book value of immovable property in absence

of SD mechanism

Immovable

properties +

share of CHC

ICo

A Co (CHC)

Equity

shareholders

Immovable

properties

B Co (Listed)

Intellectual

property

LLP Immovable

properties

outside

India

Foreign List

Co

4 Prone to change


Issues under normative valuation

► No de minimis exemption: no relief for inter-se transfers between relatives/

subsidiaries-Hold Co.

► Difficulty in carry out valuation of all down stream investment as underlying balance

sheets may not be available

► Valuation of overseas listed and unlisted companies may be difficult

► Varying valuation due to different valuation mechanism under FEMA guidelines,

indirect transfer rules

► Draft rules make no distinction between*

► Productive Vs Surplus/ Unproductive assets

► Valuation of stock in trade at fair value (Jewellery, immovable property)

► Reckons value without considering impact of tax

► No discount for minority interest / restrictions on transferability

* List is illustrative


Normative valuation more than fair value –whether a possibility?

Possibility - Normative valuation is more than fair

valuation

► Value of shares of SPV to derive value from shares B Co

Valuation of B Co. [CHC]

► Commercial fair value of B Co. – Rs 1000

► Under normative valuation – Balance sheet of B Co. to be

opened up

► Valuation of immovable property based on value adopted for

stamp duty purpose – Rs 2,000

► Value of B Co under normative valuation higher than fair

value of business

► Whether vires of section 50CA be challenged in light of SC

ruling in case of K P Varghese v ITO [1981] 131 ITR 597

SPV

B Co

[CHC]

Promoters

Hotel Business

not doing well –

Substantial

immovable

properties


Case Study: Valuation of unquoted equity shares – Preference premium

Facts:

► Preference Shares issued at premium and redeemable at

premium

► Net worth of ICo is Rs 800

► Respective holders contemplating to transfer equity as also

preference of I Co

Issue:

Whether premium on preference shares is “liability” to be reduced

for normative valuation of Equity Shares ?

Comments

► Valuation of preference shares likely to factor premium

► Securities premium received at time of issue akin to Reserves

and Surplus

► R&S not to be reduced under normative valuation

► Equity holders to bear commercial value of preference shares

► Commercial value may include premium receivable on

redemption

I Co

Equity

shareholders

Indicative Balance sheet of I Co

Liabilities Amt

(INR)

Assets Amt

(INR)

ESC 100 Assets 800

RPS 200

Securities

premium

500

Total 800 800

Preference

shareholders


Case Study: Transfer of CHC shares by Parent to subsidiary

Facts:

► Parent holds 99% in CHC 1 and 90% shares of CHC 2

► Parent transfers shares of CHC 2 to CHC1 at book cost

Issue:

► Tax implications to Parent and CHC 1 ?

Tax implications to Parent:

► No MAT as sale at book cost

► No 47(iv) exemption as transfer not to WOS

► Value substitution possible in Assessment of parent company

► No de-minimus or other exemption and 50CA applicable

Tax implications to CHC 1

► Risk under 56(2)(x) if normative value higher than book cost

► Cost – step up for actual consideration or higher value taxed

under 56(2)(x)

Parent

CHC 1

Transfer of

CHC 2

shares99%

CHC 2

Investment

90%


Section 195 - Withholding on actual or notional consideration for 50CA ?

► Asset acquired at Rs. 100 is sold for Rs. 300

► AO determines normative FMV to be Rs. 1,000

► Capital gains as per books is 200 while as per normative formula is 900

► Tax liability w.r.t. book gain is 40 (20% of 200) while as per A.O. it is 180 (20%

of 900)

► Should payer deduct Rs. 40 while crediting/paying Rs. 300 or Rs. 180?

► Text of S. 195

“Any person responsible for paying (i.e. responsible for paying Rs. 300) to a

non-resident, any other sum chargeable under the provisions of this Act shall,

at the time of credit of such income (i.e. Rs. 300) to the account of the payee

or at the time of payment thereof (i.e. Rs. 300) in cash or by the issue of a

cheque or draft or by any other mode, whichever is earlier, deduct income-tax

thereon (Capital gain of 200 / 900?) at the rates in force”

► Recipient (Primary) liability remains unaffected


Cost of bonus shares - Shift of base year for indexation from 1981 to 2001



I Co

Sub Co

100%

Issue of bonus shares

Tranche 1 1 April 1998

Tranche 2 1 April 2004

Buyer

Sale of 100% shares

(including bonus)

Facts:

► I Co and Sub Co are CHC

► ICo holds 100% in Sub Co.

► Sub Co granted bonus to ICo in two tranches:

► Tranche 1: 1 April 1998

► Tranche 2: 1 April 2004

► I Co proposes to transfer entire shareholding to buyer

Issue:

Cost of bonus shares while computing capital gain ?

Comments

► FA 2017 amended base year for indexation benefit from

1981 to 2001 w.e.f 1 April 2018

► Section 55(2)(aa)(iia) – Ordinarily cost of bonus shares

Nil but subject to 55(2)(b)



► Section 55(2)(b)(i) deals with determination of cost of capital assets

acquired prior to 1 April 2001

► Under Section 55(2)(b), at the option of taxpayer, cost will be:

► FMV of bonus shares as on 1 April 2001; or

► Cost of acquisition of shares

► Arguable that for bonus shares acquired prior to 1 April 2001, FMV

of shares as on 1 April 2001 post indexation is the COA

► FMV cannot be diluted because there was bonus issue in 2004

► Supported in some judicial precedents

► FMV substitution available for capital assets acquired by way of

49(1) transactions (ie gift, will, certain section 47 transactions)

► Cost of bonus shares acquired on 1 April 2004 will be Nil [Refer,

section 55(aa)(iia) and 55(2)(b) not applicable]

► Similarly, cost of intangible capital assets (goodwill, brand,

trademark etc) to be Nil as governed by 55(2)(a) and not

55(2)(b)

I Co

Sub Co

100%

Buyer

Sale of 100% shares

(including bonus)


Amendment to section 10(38)


Background on section 10(38)

► Section 10(38) grants LTCG exemption under normal computation on sale of LTCA

(being equity shares, equity oriented fund and business units) on Recognized

Stock Exchange upon payment of STT

► No exemption u/s 10(38) for computing MAT

► FA 2017 inserted 3rd proviso to Section 10(38) to curtail exemption granted u/s.

10(38) for equity shares, if sold on RSE post 31 March 2017

► Intent: Target to prevent money laundering through penny stocks

► The proviso does not grant 10(38) exemption if:

► the acquisition was on or after 1 October 2004 and

► such transaction was not chargeable to STT, unless specifically relieved by the

Notification No. 43/ 2017 dated 5 June 2017

► The expression “acquisition” is wide:

► Extends to cover primary subscription and secondary purchase


FA 2017 – Insertion of 3rd proviso to Section 10(38)

► Third proviso to Section 10(38) inserted vide FA 2017 reads as

under:

“Provided also that nothing contained in this clause shall

apply to any income arising from the transfer of long-term

capital asset, being an equity share in a company, if the

transaction of acquisition, other than the acquisition notified

by the Central Government in this behalf, of such equity

share is entered into on or after 1st day of October, 2004 and

such transaction is not chargeable to securities transaction

tax under Chapter VII of the Finance (No.2) Act, 2004 (23 of

2004)”


Section 10(38) - Notification No. 43/2017 –Target Acquisitions under scanner

Clause (b)

Transaction of Acquisition of

existing listed equity shares off

market

Clause (c)

Acquisition of unlisted equity

shares of a company post delisting but

prior to relisting

Clause (a)

Acquisition of existing listed equity shares of

thinly traded company by way

preferential allotment

► The Notification provides the list of transactions which are not

exempt under Section 10(38), unless excepted

► Limitation applicable to Acquisition on or after 1 October 2004:


Section 10(38) - Notification No. 43/2017 –Exceptions to negative list

► The exceptions provided in the Notification are as under:

Carve Outs

i. Approved by SC/HC/NCLT/SEBI/RBI

ii. Acquisition by NR in accordance with FDI

iii. Acquisition by Category I/II AIF and VCF

iv. Through preferential allotment not governed by Chapter VII of SEBI (ICDR), 2009

• To lender or debenture holder on conversion of loan or debt (subject to conversion

terms provided at time of issue)

• Under scheme approved by HC under 391-394 or 230-234

• In terms approved by Rehabilitation scheme (BIFR, SICA 1985, Insolvency and

Bankruptcy Code

Clause (a)

Acquisition of existing listed equity shares of thinly traded company by way preferential allotment


Section 10(38) - Notification No. 43/2017 –Exceptions to negative list

► The exceptions provided in the Notification are as under:

Clause (b)

Transaction of acquisition of existing listed equity shares off market

Carve Outs

Following acquisitions only if made in accordance with SCRA, 1956 (if applicable):

i. Through fresh issue of shares [other than thinly traded shares covered by clause (a)]

ii. By banks, PFIs, reconstruction or securitization company

iii. Approved by SC/HC/NCLT/SEBI/RBI

iv. Under SEBI (ESOP and ESPS) Guidelines.

v. By NR in accordance with FDI

vi. Under SEBI (SAST) Regulations, 2011

vii. From Government

viii. By Category I/II AIF and VCF

ix. By mode of transfer specified in s. 47/50B provided “previous owner” was eligible to

claim exemption


Case Studies on section 10(38)


Case study - Acquisition in IPO

Facts

► A Co is an unlisted company

► The promoters of A Co. to raise funds by listing A Co. on RSE for the

first time

► Fresh issue of shares by A Co.

► Shares would be received by public shareholders off market (ie prior

to listing)

Issue

Whether shares acquired in IPO eligible for exemption under 10(38) ?

Comments

► Not a case of “existing listed equity shares”, hence outside clause (a)

and (b) of notification:

► Without prejudice: acquisition by way of fresh issue protected by

point (i) of proviso to clause (b) of notification protects

A Co

Acquisition/ Issue of

shares in IPO

All bonus issues, rights issues, ESOP protected too


Case study - Acquisition pursuant to merger

Facts

► Off market acquisition of listed shares by B Co.

► Vesting of such shares in C Co. pursuant to tax

neutral merger approved by NCLT/ HC

► Issue of listed shares to A Co. as merger

consideration

► Acquisition of listed shares of C Co by A Co. off

market

Issues

► Whether A Co. and C Co. eligible for 10(38)

exemption ?

C Co. (Listed

company)B Co.

A Co.

D Co (List

Co)

Tainted

Acquisition of

listed shares

by B Co.

Vesting of listed

shares in C Co. on

merger

100%

20%


C Co. (Listed

company)B Co

A Co.

D Co (List

Co)

Tainted

Acquisition of

listed shares by

B Co.

Vesting of listed

shares in C Co.

on merger

Eligibility of 10(38) to C Co.

► C Co acquires shares of D Co as merged entity

► Acquisitions by C Co. pursuant to merger scheme approved

by HC/ NCLT [exempt at item (iii) of clause (b)]

► Though exempt transfer u/s.47 carve out at item (ix) not

applicable for C Co. as B Co. not eligible

Eligibility of 10(38) to A Co.

► A Co acquires as shareholder of merging company:

► Fresh issue of listed shares exempt as item b(i) of

notification

► Acquisition pursuant to NCLT/ HC [exception at item b(iii)]

► Exempt u/s 47 transaction. Carved out under item b(ix)?

► No previous owner of A Co.

100%

20%

Case study - Acquisition pursuant to merger (contd…)

Fast Track merger does not need HC/

NCLT approval


Transaction of gift [47(iii)]

► Z received as gift off market without STT

► Such transaction covered by S. 47 and can be

exempted under item (ix) of clause (b):

► if “previous owner” was eligible to claim

► The eligibility of 10(38) in the hands of Mr Z to be

seen qua “previous owner” of shares

► Previous owner for Mr Z - Mr Y or Mr X ?

► Analogy from definition of “previous owner” as

defined under Explanation to Section 49(1) ?

► Under 49(1), cost and holding period substitution

would be taken from Mr X and consequently

eligibility to be seen qua Mr X !!

Disposal of shares

on a RSE

Mr. Z

Gift - off

market

Gift – Off

market

Mr. X Mr. Y

STT paid

acquisition

Case study – Gift of shares

Acquisition by way of inheritance – Same analogy

as gift. It is not a transaction too.


Case study – Inter-se promoter transfer

Facts:

► Mr. X and Mr Y are promoters of I Co (Listed Co)

holding 45% and 10% respectively

► Mr X to transfer 35% shares to Mr Y as under:

► Sold off market to Mr. Y for consideration; or

► On stock exchange in private window – Post

STT

► Whether Mr. X and Mr. Y eligible to claim s. 10(38)

exemption?

Eligibility of 10(38) to Mr. X:

► Had it been Off market transfer

► Not eligible to capital gains exemption as no STT

paid

► Stock exchange transfer

► Eligible for 10(38) as STT paid

Mr. X Mr. Y

I Co (List Co)

45% 10%

Present structure

Mr. X Mr. Y

I Co (List Co)

10% 45%

Resultant structure – post transfer

Transfer of 35% stake


Case study – Inter-se promoter transfer

Eligibility of 10(38) to Mr. Y:

Off market acquisition of existing equity shares

► Clause (b) applicable

► Acquisition by Mr Y of 35% equity likely to trigger

open offer under SEBI (Substantial Acquisition of

Shares and Takeovers) Regulations, 2011 [‘SEBI

(SAST)’]

► Being inter-se promoter transfer, Regulation 10 of

SEBI (SAST) Regulations, 2011 may exempt Mr Y

from open offer subject to disclosure requirements

► Disclosure required under Regulation 10 and

Regulation 29 of SEBI (SAST) Regulations

► Arguable that exemption under item (vi) of clause

(b) available as acquisition made under SEBI

(SAST) Regulations

Mr. X Mr. Y

I Co (List Co)

45% 10%

Present structure

Mr. X Mr. Y

I Co (List Co)

10% 45%

Resultant structure – post transfer

Transfer of 35% stake


Case study – Acquisition pursuant to conversion of company into LLP

Facts

► A Co acquired shares of listed company on RSE

► Non-tax neutral conversion of A Co. into LLP

Issue

► Eligibility of LLP to claim exemption u/s 10(38) as

shares vest without STT ?

Comments

► Acquisition/ vesting in LLP off market - Not

qualifying as section 47 conversion

► Third proviso to Section 10(38) and clause (b)

requires “transaction of acquisition”

► Whether arguable that such conversion is not

“transaction of acquisition” ?

A Co

List Co shares List Co shares

LLP

Promoters Partners

Conversion of Company to LLP

Akin to acquisition by way of inheritance

It is not a transaction too.


Recently concluded treaties with Mauritius and Singapore


Case Study - Impact of grandfathering under India-Mauritius treaty

Facts

► The acquisition of shares and CCDs of ICo by Mau

Co has taken place as under:

Issue

Grandfathering benefit under India-Mauritius treaty on

sale of shares of ICo by Mau Co to Mau Co 1 ?

US Co

Mau Co

I Co

Mau Co 1

100%

100%

Transfer of shares

and CCDs of I Co

India

Outside India

Particulars Year of

Acquisition

Original subscription 2008-09

Subscription of partly paid shares 2016-17

Acquisition of CCDs 2017-18

Bonus shares 2017-18

Received as gift (Donor acquired

in 2010)

2017-18


India-Mauritius protocol

3A. Gains from the alienation of shares acquired on or after 1st

April 2017 in a company which is resident of a Contracting State

may be taxed in that State.

3B. However, the tax rate on the gains referred to in paragraph 3A of

this Article and arising during the period beginning on 1st April,

2017 and ending on 31st March, 2019 shall not exceed 50% of

the tax rate applicable on such gains in the State of residence of

the company whose shares are being alienated;

4. Gains from the alienation of any property other than that

referred to in paragraphs 1, 2, 3 and 3A shall be taxable only in

the Contracting State of which the alienator is a resident.


Transfer of shares/CCD in FY 2018-19

Nature of acquisition Year of

acquisition

Grandfathering

under I-M Protocol?

Benefit of 50% of CG

tax in window period

Original subscription 2008-09 Yes, Acquired before

31.03.17

Academic, Fully

exempt

Subscription of partly

paid shares

2016-17 Arguably Yes Academic, Fully

exempt

Acquisition of CCDs 2017-18 Academic as CCDs

exemption not

restricted

Academic, Fully

exempt

Bonus shares 2017-18 No, acquired post

March 2017

Can claim concession

subject to LOB

Received as gift 2017-18 No, acquired post

March 2017

Can claim concession

subject to LOB


Mauritius and Multilateral (MLI) Treaty

► I-M current treaty does not have PPT test

► I-M current treaty does not have LOB clause where

there is complete grand-fathering

► Mauritius has not covered India as CTA under MLI

► No change in treaty status until bilateral negotiations

concluded


Protocol amending India-Singapore treaty

► Singapore Company established in 2015 has the following investments

► Shares subscribed and fully paid shares in December 2016

► CCD subscribed in same I Co in April 2017

► Re-negotiated India Singapore treaty

► Grandfathers capital gain derived from investments in shares of I Co prior to 31 March 2017

► Obtaining tax exemption under the treaty subject to

► Establishing tax residence of Singapore in context of capital gains exemption upon

compliance with

► Primary purpose behind investment was not to claim capital gains exemption

► Compliance with the annual expenditure test

► Continues to exempt capital gains from sale of CCD or other securities as before

► In fact, LOB conditions do not apply to other securities post 1 April 2017

► Unlike Mauritius, India Singapore treaty likely to change as a result of MLI signed in June 2017

► MLI may likely take effect for taxation of capital gain accruing on or after 2019/2020

12 July 2017 Presentation title

Indirect transfer of India assets


Case study – Direct transfer v. indirect transfer

Mau Co

US Co

Outside India

India

ICo

Indirect transfer

Direct transfer

NO TREATY

PROTECTION

TREATY

PROTECTION

UK Co

France

Co

Outside India

India

ICo

Indirect transfer

Direct transfer

TREATY

PROTECTION

NO TREATY

PROTECTION

Indirect transfer

beneficial!!

Direct transfer beneficial!!


Case study – Direct transfer v. indirect transfer► Article 14 of India-France tax treaty – Capital Gains

4. Gains from the alienation of shares of the capital stock of a company the

property of which consists directly or indirectly principally of immovable property

situated in a Contracting State may be taxed in that Contracting State. For the

purposes of this provision, immovable property pertaining to the industrial or

commercial operation of such company shall not be taken into account.

5. Gains from the alienation of shares other than those mentioned in paragraph 4

representing a participation of at least 10 per cent in a company which is a

resident of a Contracting State may be taxed in that Contracting State.

6. Gains from the alienation of any property other than that mentioned in

paragraphs 1, 2, 4 and 5 shall be taxable only in the Contracting State of

which the alienator is a resident.


Case study – Impact of dividend distributionFact pattern

► SPV and ICo are presently debt-free entities

► Cost of acquisition to SPV of ICo shares = 30

► FMV of ICo in SPV > 50% [Rule 11UB]

► Shares of SPV deemed to be situated in India;

► Capital gains trigger upon transfer of SPV shares by

FCo

► SPV makes payment of dividend to FCo

► Circular 4/2015 exempts overseas dividend

► Dividend distribution out of overseas assets

► Dividend in the form of ICo shares attracts receipt

based taxation in India

► FCo transfers shares of SPV at FMV

► Reduction in overall FMV of SPV

► Lower consideration on transfer; lower capital gains

SPV

FCo

Dividend payout

Outside India

India

Overseas Assets

ICo


Comparative tax Impact pre and post dividend distribution

► FMV matrix of SPV:

SPV

FCo

Dividend payout

Outside India

India

Overseas Assets

ICo

Particulars Pre divi-

dend

Divi-

dend

pay-out

Post divi-

dend

India assets value (A) 55 Nil 55

Overseas assets value (B) 45 45 -

Sale value of SPV (C = A + B) 100 - 55

Indexed cost of SPV shares (D) 30 - 30

Total capital gains (E = C – D) 70 - 25

Proportion of India assets (F = A/C) 55% - 100%

Proportionate capital gains taxable in India as

India as per Rule 11UC (E*F)

38.5 - 25


Adverse impact of dividend distribution

► FMV matrix of SPV:

Particulars Pre divi-

dend

Divi-

dend

pay-out

Post

divi-

dend

India assets value (A) 45 Nil 45

Overseas assets value (B) 55 45 10

Sale value of SPV (C = A + B) 100 - 55

Indexed cost of SPV shares (D) 30 - 30

Total capital gains (E = C – D) 70 - 25

Proportion of India assets (F = A/C) 45% - 56%

Proportionate capital gains taxable in

India as per Rule 11UC (E*F)

- - 14

SPV

FCo

Dividend payout

Outside India

India

Overseas

Assets

ICo

Thank You

“This Presentation is intended to provide certain general information existing as at the time of

production. This Presentation does not purport to identify all the issues or developments. This

presentation should neither be regarded as comprehensive nor sufficient for the purposes of decision-

making. The presenter does not take any responsibility for accuracy of contents. The presenter does

not undertake any legal liability for any of the contents in this presentation. The information provided is

not, nor is it intended to be an advice on any matter and should not be relied on as such. Professional

advice should be sought before taking action on any of the information contained in it. Without prior

permission of the presenter, this document may not be quoted in whole or in part or otherwise.”

bombay chartered accountants’ society · 2017-07-11 · fmv of b co based on stock exchange...

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