Indirect Transfer provisions under Income Tax Act - CBDT Clarifies
UNDER the indirect transfer provisions contained in section 9(1)(i) of the Income Tax Act,
all income accruing or arising, whether directly or indirectly,
through or from any business connection in India, or
through or from any property in India, or
through or from any asset or source of income in India or
through the transfer of a capital asset situate in India,
shall be deemed to accrue or arise in India.
An asset or a capital asset being any share or interest in a company or entity registered or incorporated outside India shall be deemed to be and shall always be deemed to have been situated in India, if the share or interest derives, directly or indirectly, its value substantially from the assets located in India.
Section 285A of the Act casts a reporting obligation on the Indian concern whose shares are substantially held directly or indirectly by a company or entity registered or incorporated outside India.
Queries have been received by the Board about the scope of the indirect transfer provisions. The Board constituted a Working Group on 15th June, 2016 to examine the issues raised by stakeholders. The Board has considered the comments of the Working Group on the said issues and has issued clarifications.
CBDT Circular No. 41/2016., Dated: December 21, 2016