Which one of the following situations best reflects “Indirect Transfers” often talked about in media recently with referece to India?

[UPSC Civil Services Exam – 2022 Prelims]

(a) An Indian company investing in a foreign enterprise and paying taxes to the foreign country on the profits arising out of its investment.

(b) A foreign company investing in Indian and paying taxes to the country of its base on the profits arising out of its investment.

(c) An Indian company purchases tangible assests in a foreign country and sells such assets after their value increases and transfers the proceeds to India.

(d) A foreign compnay transfers shares and such shares derive their substantial value from assest located in India.


Answer: (d)        

Explanation:

  • The provisions of indirect transfer focus on taxing transactions where shares were transferred abroad, but the underlying assets were in India.
  • Indirect transfer happens when foreign entities own assets in India, and instead of directly transferring the assets, they transfer the shares of these entities. Hence, statement 4 is correct.
  • In 2012, the Indian government introduced retrospective indirect transfer provisions to bring under the tax net transactions like Vodafone Group’s acquisition of Hutchison Essar in 2007, which acquired a Cayman subsidiary owned by Hutchison International.
  • Only indirect transfer transactions where over 50% of the underlying assets are in India are subject to capital gains tax in India, but the clarifications also expanded the tax to funds, including those outside India.

Consider the following statements:                                                                   The Parliament of India can place a particular law in the Ninth Schedule of the Constitution of India. The validity of a law placed in the Ninth Schedule cannot be examined by any court and no judgement can be made on it. Which of the statements given above is/are correct?

Consider the following statements:                                               

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Consider the following statements:                                                         The Parliament of India can place a particular law in the Ninth Schedule of the Constitution of India. The validity of a law placed in the Ninth Schedule cannot be examined by any court and no judgement can be made on it. Which of the statements given above is/are correct?

Consider the following statements:                                               

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