The Indirect Transfer Lab

Two foreign parties trade shares of an offshore company. Can India still tax it? Move the sliders and watch the law respond, one fact at a time.

The facts

Fair market value of Indian assets held by the offshore company: Indian assets as a share of all its assets: Seller’s holding in the offshore company: Gain on the offshore share sale: Seller holds a board seat or control rights Seller is a Category I foreign portfolio investor

Both tests use fair market value under Rule 11, not book value.

What the law says

Test 1: substantial value

Test 2: proportion

Exemption: small shareholder

Exemption: Category I FPI