Withholding tax on sale of shares on foreign company

[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

AI Summary

Foreign Company Share Sale Raises Questions on Tax Withholding Without DTAA; Debates on Section 195 Applicability Continue. A foreign company, A Ltd., sold shares of an Indian company, C Ltd., to another foreign company, B Ltd., for Rs. 100 lakhs. The discussion centers on whether B Ltd. must withhold tax on this transaction, given the absence of a Double Taxation Avoidance Agreement (DTAA) between A Ltd. and C Ltd. One participant argues that no tax should be withheld as the payment is not considered taxable income. Another participant questions the applicability of Section 195, while a third states that withholding tax is not required since both parties are non-residents.