Indirect Transfer of Assets: Taxable!
By Sanjay Kapadia, Tax Partner, EY & Anand Jain, Sr. Consultant, EY
March 17, 2012 / 14:25 IST
By Sanjay Kapadia, Tax Partner, EY & Anand Jain, Sr. Consultant, EYIndia continues to be a preferred destination for global investment in view of its demographic advantage and burgeoning middle class. Even as the developed world continues to struggle with its swelling debt, aging population and lower demand, the India story looks strong and upbeat and hence, overseas investors continue to show a keen interest in India. Historically, overseas investors have adopted multi-tier holding structures typically based out of tax friendly jurisdictions while investing in India. Such a structure provided an opportunity to overseas investors to exit from India by means of a cross border transaction involving non-residents, resulting in minimal or nil tax implications. The posture adopted by the Revenue authorities in the case of the Hutch-Vodafone transaction has lead to overseas investors reviewing their shareholding structure. The Hutch-Vodafone transaction entailed sale of shares of Hutch
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