Section 47(vic) - Transfer of shares held in an Indian company by a demerged foreign company to the resulting foreign company

Demerger share transfer: non-recognition of capital gains where cross-border demerger meets continuity and foreign tax non-attraction conditions.

Section 47(vic) provides non-recognition where a demerged foreign company transfers shares of an Indian company to the resulting foreign company under a demerger that does not attract capital gains tax in the demerged company's country of incorporation. The transferee's cost is determined by the value by which the original cost of acquisition of the demerged company's shares exceeds the cost of acquisition of the resulting company's shares. A continuity condition requires persons holding at least seventy-five percent in value of shares in the demerged company to become shareholders in the resulting company.