Withholding tax on sale of shares on foreign company, Income Tax

[PANKAJ GROVER]

A Ltd. is a foreign company which is holding the shares in an Indian company C Ltd .Now the shares of C Ltd. are sold by A Ltd. to another foreign company B Ltd. for Rs. 100 lakhs (long term). Also there is No DTAA between the Indian company C Ltd. and the company A ltd.. Here the issue arises that whether the company B Ltd. is required to withhold tax on the payment to A Ltd. and if yes, then at which rate and amount. Please also explain the relevant provisions for our reference

Posts / Replies

[shruti mittal]

as per my opinion:

No TDS should be deducted ..... because whatever the amount paid by B ltd to A ltd .. not considered as an income which is chargeable under income tax...Consider all provsions of TDS as a whole.

[PANKAJ GROVER]

Thanks Shruti for your reply, our concern is whether provisions of Section 195 are applicable to such transaction and withholding tax needs to be deducted.

 

Thanks

 

Pankaj Grover

[deepak gulati]

The TDS / WHT is not applicable as both the parties are non residents, had payer been Resident Tax was to be deducted.