Question
Download Solution PDFWhich one of the following situations best reflects "Indirect Transfers" often talked about in media recently with reference to India ?
Answer (Detailed Solution Below)
Detailed Solution
Download Solution PDFThe correct answer is Option 4.
Key PointsIndirect transfer
- Its provisions deal with the taxation of transactions wherein even though the transfer of shares took place overseas, the underlying assets were in India.
- It refers to situations where when foreign entities own shares or assets in India, the shares of such foreign entities are transferred instead of a direct transfer of the underlying assets in India. Hence, Option 4 is correct.
- Indirect transfer provisions were introduced in the I-T act in 2012 with retrospective effect, as the government sought to bring Vodafone Group Plc.’s $11 billion acquisition of Hutchison Essar Ltd in 2007 (by acquiring a Cayman subsidiary owned by Hutchison International) and the other such transactions under the tax net in India.
- Only those indirect transfer transactions wherein more than 50% of the underlying assets are in India will be subject to a levy of capital gains tax in India. But the clarifications also extended the tax to funds, including those outside India.
Last updated on Jul 14, 2025
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