Tax Column

Tax Jayesh Dadia Chartered Accountant

I am a non-resident settled in Singapore. I hold investments in equities of Indian listed companies. I have decided to sell all these investments to another non-resident settled in the UK. Is there any tax implication involved as the transactions are between two non-residents residing outside India? If it is taxable, then how can one compute the tax liability? 

Although sale and purchase transactions are between two non-residents residing outside India, yet you are liable to pay Capital Gain Tax (CGT) in India since what is transferred is an asset situated in India. Equity shares of listed Indian companies are assets situated in India. Therefore, CGT is levied under the Indian Income Tax Act. The market value of equity shares of listed companies would be considered as deemed sale consideration. You are entitled to reduce the cost from deemed consideration and the balance amount would be considered as capital gain. If it is long term then the tax rate is at 10 per cent and if it is short term then the tax rate is at 15 per cent. If the share transactions are off-market without STT paid, then long-term capital gain is chargeable at 20 per cent and short-term capital gain at 30 per cent plus applicable surcharge.