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Capital gains from transfer of shares held by Mauritian company not taxable in India

Capital gains from transfer of shares held by Mauritian company not taxable in India


The Authority for Advance Rulings (AAR), a quasi-judicial panel, has ruled that capital gains arising from transfer of shares held by a Mauritian company in an Indian firm are not taxable in India. The ruling, in response to a plea by DB Zwirn Mauritius to ascertain its taxability on transfer of equity shares of Quippo Telecom Infrastructure , will come as a major relief to UK-based Vodafone which has sought the authority\'s opinion in a transaction of similar nature. Vodafone has sought AAR\'s opinion on if the company was required to deduct tax on payment made to Essar for the 22% stake held by the Indian company through a Mauritius-based entity. "The present AAR decision, which has upheld the nontaxability of the gains under the Mauritius double taxation avoidance agreement (DTAA), provides more certainty to taxpayers," said consultancy firm Ernst & Young (E&Y ) in a note

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