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TMI BlogClarification on Indirect Transfer provisions in case of redemption of share or interest outside India under the Income-tax Act, 1961X X X X Extracts X X X X X X X X Extracts X X X X ..... Transfer provisions in case of redemption of share or interest outside India under the Income-tax Act, 1961 Under the provisions contained in section 9(1)(i) of the Income-tax Act, 1961 ('Act'), all income accruing or arising, whether directly or indirectly, through or from any business connection in India, or through or from any property in India, or through or from any asset or source ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ck. The Board has received representations to exclude investors above the level of the direct investor, who is already chargeable to tax in India on such income, from the ambit of indirect transfer provisions of the Act. 3. Addressing such concerns in his Budget speech on 1st February, 2017, the Finance Minister had stated that Category I and Category II Foreign Portfolio Investors (FPI) will be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fied funds'), is redeemed in an upstream entity outside India in consequence of transfer of shares or securities held in India by the specified funds, the income of which have been subject to tax in India. In such cases, application of indirect transfer provisions on redemption of share or interest in the upstream entity may lead to multiple taxation of the same income. In respect of Category ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pplicable only in those cases where the proceeds of redemption or buyback arising to the nonresident do not exceed the pro-rata share of the non-resident in the total consideration realized by the specified funds from the said transfer of shares or securities in India. It is further clarified that a non-resident investing directly in the specified funds shall continue to be taxed as per the extant ..... X X X X Extracts X X X X X X X X Extracts X X X X
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