CBDT Clarifies Indirect Transfer Rules in Section 9(1)(i) for Foreign Entities with Indian Assets.
The circular from the Central Board of Direct Taxes provides clarifications on the indirect transfer provisions under section 9(1)(i) of the Income Tax Act, 1961. It addresses the taxation of income arising from the transfer of shares or interests in foreign entities that derive substantial value from assets located in India. The circular outlines scenarios involving funds and entities set up outside India and clarifies when these provisions apply, especially concerning foreign portfolio investors (FPIs), master-feeder fund structures, and offshore mergers. It emphasizes the applicability of these provisions based on asset value thresholds and investor control, while also addressing concerns about potential double taxation and compliance challenges.
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