Transfer of Shares between Resident and Non-resident: Six Steps FC-TRS

2 March 2017 • Nupur Singhal

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Transfer of Shares between Resident and Non-resident: Six Steps FC-TRS

2 March 2017 • Nupur Singhal

With the increasing pace of paperless governance, Reserve Bank of India (RBI) allowed the facility to file form FC-TRS electronically on e-Biz platform vide A.P. (DIR Series) Circular No. 9 dated August 21, 2015. Filing of form FC-TRS electronically through e-biz portal is mandated discontinuing the physical filing w.e.f. February 8, 2016 vide A.P. (DIR Series) Circular No. 40 dated February 1, 2016.

SIX IMPORTANT POINTS TO REMEMBER

  1. There is no fee for filing FC-TRS through e-biz portal.
  2. The onus of filing form FC-TRS lies on the transferor/transferee whosoever is resident in India.
  3. The transferor/transferee/consultant filing the form needs to register itself with e-biz portal before filing it.
  4. It is mandatory to attach the consent letter of both buyer and seller with form FC-TRS.
  5. Valuation of shares to be transferred must be as per FDI norms. (Detailed below)
  6. Sectoral limits applicable on the company must be taken care of before transferring shares.

REGISTRATION ON E-BIZ PORTAL

Following 2 registrations are required on e-biz portal before you can file form:

  1. Firstly, the transferor/transferee/consultant filing the form shall register itself on the portal.
  2. After that, the business/company in which the investment is made shall also be registered on the portal.

Only after the above two registrations are done, the transferor/transferee/consultant can file FC-TRS.

REPORTING REQUIREMENT IN FORM FC-TRS: LEGAL PROVISION

As per the Consolidated FDI Policy 2016, reporting of transfer of shares between Residents and Non-residents and vice- versa is to be made in Form FC-TRS. The Form FC-TRS should be submitted to the AD Category – I bank, within 60 days from the date of receipt/date of payment of the amount of consideration. The onus of submission of the Form FC-TRS within the given time frame would be on the transferor / transferee, resident in India.

ACTUAL STAGE OF FILING FC-TRS WITH E-BIZ PORTAL

Case I: Sale from Non-resident to Resident

At present, since filing of FC-TRS electronically is mandated, it is practically not possible to file FC-TRS within 60 days from the date of receipt of the amount of consideration in case the sale is made from Non-resident to Resident. This is because now AD Category-I bank requires proof of submitting FC-TRS on e-biz portal before releasing the payment to the Non-resident.

Thus, practically, following steps are followed:

Six Simple Steps for Transfer from Non-resident to Resident Under e-Biz

  1. Filing FC-TRS electronically along with the attachments.
  2. Submitting the proof of filing FC-TRS to AD Category-I bank along with the application and other required documents for making payment of consideration.
  3. Remittance is made
  4. Approval of FC-TRS by RBI. (The status can always be checked online)
  5. Submitting FC-TRS, proof of payment, share certificate(s), if applicable, share transfer deed and other document required with the company.
  6. Company registers the transfer.

Case II: Transfer from Resident to Non-resident

If the transfer by way of sale is made from resident to non-resident, it becomes necessary to attach FIRC for receipt of consideration from non-resident with form FC-TRS. Thus, following steps are followed for successful registration of transfer from resident to non-resident:

Six Simple Steps for Transfer from Resident to Non-resident Under e-Biz

  1. Receipt of consideration from non-resident.
  2. Obtain FIRC for the receipt above from AD Category-I bank.
  3. File FC-TRS electronically along with the attachments. FIRC is required to be attached with the form.
  4. Approval of FC-TRS by RBI. (The status can always be checked online)
  5. Submitting FC-TRS, share certificate(s), if applicable, share transfer deed and other documents required with the company.
  6. Company registers the transfer.

SIX DOCUMENTS REQUIRED TO BE ATTACHED ALONG WITH THE FORM

Following documents shall be attached to the e-form FC-TRS:

  1. Consent letter duly signed by the buyer and seller or their duly appointed agent and in the latter case, the Power of Attorney document.
  1. The shareholding pattern of the investee company before and after the acquisition of shares by a person resident outside India along with CS certificate from investee company that FDI is within the prescribed limit and as per extant guidelines.
  1. Certificate indicating fair value of shares from a Chartered Accountant.
  1. Declaration from the buyer to the effect that he is eligible to acquire shares/compulsorily and mandatorily convertible preference shares/debentures under FDI policy and the existing sectoral limits and pricing guidelines have been complied with. If applicable, declaration from the FII/sub account to the effect that the individual FII/sub account ceiling as prescribed has not been breached.
  1. If the sellers are NRIs/OCBs, the copies of RBI approvals evidencing the shares held by them, if any.
  1. Declaration by the Non-resident along with the self-attested photo ID proof of the person signing and the board resolution from the foreign company (if Non-resident is a Company) authorising to sign FC-TRS form.

VALUATION ASPECT

Case I: Listed Companies

In terms of SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2009 as may be amended from time to time.

It is important to note that it holds good only for off market trades of listed securities. For trading on stock exchanges by Non-residents, refer to the SEBI (Foreign Portfolio Investors) Regulations.

Case II: Unlisted Companies

As per any internationally accepted pricing methodology on arm’s length basis.

PRICING OF THE SECURITIES TRANSFERRED BY WAY OF SALE

Case I: Sale from Resident to Non-resident

 The transfer shall be made at or above fair value determined as above. The minimum price shall be the fair value.

Case II: Sale from Non-resident to Resident

The transfer shall be made at or below the fair value determined as above. The maximum price shall be the fair value.

78 comments

  1. The AD banker had rejected the Form FCTRS after 50 days of submission. Is there any mandated time-limit for the AD bank to approve or reject the FC-TRS?

    1. Dear Reader,

      Please note that pursuant to RBI Circular No. RBI/2017-18/194 A.P. (DIR Series) Circular No. 30, the Authorized Dealer (AD) bank has up to 5 working days to approve, reject, or in exceptional cases forward the application to the Reserve Bank of India (RBI).

      The Indian entity receives the application outcome via email registered with the Foreign Investment Reporting and Management System (FIRMS) portal. If rejected, the reasons are provided so that the entity can discuss and rectify issues with the AD bank before submitting a revised application for timely processing.

      In summary, the AD bank must process the application within 5 days, and any rejection reasons can be discussed with the bank to allow the entity to promptly resubmit a corrected application.

  2. Are the FAQs still available where it is mentioned that FCTRS is not required if transfer is in form of gift between NR and R

  3. A resident Indian Father wants to gift his shares to his non resident son to his NRO demat account through off market transfer. Do we have to get RBI approval for the transfer between RI father and NRI son ? Do we have to file FCTRS after the transfer?

    1. Dear Reader,

      Please note that the transfer between a Resident Indian and a Person Resident Outside India by way of gift requires prior approval of the Reserve Bank of India (RBI) in terms of the Foreign Exchange Management (Non-Debt Instruments) Rules, 2019. Further, the approval of the RBI shall be subject to the following conditions:

      a) the Donee is eligible to hold such a security under FDI Rules as amended from time to time;
      b) the gift does not exceed five percent of the paid-up capital of the Indian company
      c) the applicable sectoral cap in the Indian company is not breached;
      d) the Donor and the Donee shall be “relatives” within the meaning in clause (77) of section 2 of the Companies Act, 2013;
      e) the value of security to be transferred by the transferor together with any security transferred to any Non-Resident as gift during the financial year does not exceed the rupee equivalent of USD 50,000;
      f) such other conditions as considered necessary in public interest by the Central.

      Filing of Form FC-TRS: The transfer of shares between a Resident Indian and a Person Resident Outside India shall be required to be reported in Form FC-TRS within 60 days from the date of transfer of shares.

      Further, the transfer of shares will also attract the provision of the Income Tax Act, 1961.

  4. Dear Sir,
    i)Can a company file FC-TRS on behalf of the Transferor or Transferee, because as per act there is a point where they mentioned that onus of filing FC-TRS is on Transferor or on Transferee, If yes what is the reference for it?
    ii) if not then on behalf of above mentioned person any professional can file FC-TRS form? if Yes what will be the required documents for taking authorisation and which type of option which we have to select for filing FC-TRS form on behalf of Transferor or Transferee

    1. Dear Reader,

      The onus of filing the FC-TRS is on the person resident in India. For any specific professional support, please connect with any practicing professional who will help you out.

  5. Hi, non-resident had invested in pvt ltd company in 2008 on non-repatriable basis..

    Now existing non resident is selling shares to another foreign company and shares will be held on repatriable basis. Please confirm if share consideration can be remitted by foreign company to share holders nro account and who will file FC-TRS.

    1. Dear Reader,

      As per Schedule I of the FEM (Mode of Payment and Reporting of Non-Debt Instruments) Regulations, 2019 where the equity shares are sold by non-resident the sale proceeds (net of taxes) of the capital instruments may be remitted outside India or may be credited to the NRE/ FCNR(B) account of the person concerned.

      In this instance, the person resident outside India who holds equity shares on a non-repatriable basis would be responsible for filing Form FC-TRS.

    1. Dear Reader,

      The transfer of capital instruments between a person resident in India and person resident outside India on repatriable basis, is governed by Regulation 13(4) of the Foreign Exchange Management (Transfer or Issue of Security by a Person Resident Outside India) Regulations, 2017. As per the aforesaid provision, such transfer shall be reported in Form FC-TRS within sixty days of transfer of capital instruments or receipt/ remittance of funds, whichever is earlier.

      Please note that the transfer/cancellation of shares is governed by the provisions of the Companies Act, 2013. Thus, the non- filing of such form will not result in cancellation of shares.

      However, non- filing of such form will result in contravention of provisions of the Foreign Exchange Management Act, 1999 and rules, regulations made thereunder and will attract penal consequences.

      Hope we are successful in resolving your query.

  6. If the Company issues shares for managerial renumeration to a non-resident, is FC-GPR required to filed?
    What will be the UIN in that case?

    1. Dear Sir,

      Such issue of shares against managerial remuneration would fall under the category of non-cash consideration. Thus, the issue should be in conformity with the Reserve Bank of India (RBI) circular “Foreign Direct Investment (FDI) in India – Issue of equity shares under the FDI Scheme against legitimate dues” (https://www.rbi.org.in/Scripts/NotificationUser.aspx?Id=9242&Mode=0) dated 17th September, 2014. You can read our blog (https://bsamrishindia.com/capitalization-of-import-payables-admissible-or-not/) to get a detailed view on the circular.

      Further, allotment of shares to NR by an Indian Company is deemed as a foreign direct investment (even if it is for non-cash consideration) and the issuer is required to report such FDI to RBI via filing of form FC-GPR. Thus, you would be required to file the Form FC-GPR.

      Furthermore, we could not understand the meaning of the term UIN. Kindly elaborate.

  7. There is transfer of shares of a private limited from NR to R.
    Non Resident wants to sale consideration in his NRO account maintained in India.

    1. Whether it is possible ?
    2. Whether FC-TRS can be filed in this case ?

    1. 1) In case of sale of equity shares by NR, as per Schedule I of the Regulation 3.1 of FEMA (Mode of Payment and Reporting of Non-Debt Instruments) Regulations, 2019, the sale proceeds (net of taxes) of the capital instruments may be remitted outside India or may be credited to the NRE/ FCNR(B) account of the person concerned.

      2) As per Regulation 4(3) of the Foreign Exchange Management (Mode of Payment and Reporting of Non-Debt Instruments) Regulations, 2019, FC TRS is not required to be filed in case the transfer is by way of sale between a person resident outside India holding capital instruments on a non-repatriable basis and a person resident in India. Thus, if you proposed to transfer the shares on repatriable basis, you are required to report such transfer by filing of Form FC-TRS.

      The onus of reporting shall be on the resident transferee or the person resident outside India holding equity instruments on a non-repatriable basis, as the case may be.

    1. As per Foreign Exchange Management (Non-Debt Instrument) Rules, 2019, the valuation of equity instruments should be done as per any internationally accepted pricing methodology for valuation on an arm’s length basis duly certified by a Chartered Accountant or a Merchant Banker registered with the Securities and Exchange Board of India or a practising Cost Accountant, in case of an unlisted Indian Company. Considering the above we understand that valuation certificate can be obtained from either a CA or a registered valuer.

  8. 1) What is the date of transfer as per FC TRS. Is it the date of execution of Form SH-4 or date of approval of transfer by Board.
    2) Is transfer agreement to be attached to FC TRS same as Form -SH-4 or any other one. in case of any other, could you give the format

    1. Please find below reply on the query:
      1. The date of transfer shall be the date of approval of the transfer by the board.
      2. The transfer deed is required to be in form SH-4 as required under the Companies Act, 2013. The same is required to be attached in Form FC-TRS along with the relevant extracts of transfer agreement executed between the transferor and transferee.

  9. In case of NR to IR transfer (both individuals)
    1. kindly let me know the documents to be attached in FCTRS.
    2. valuation report need to be obtained from registered valuer or any CA can issue valuation report?
    3. What is the stamp duty to be paid for transfer. and who is obliged to pay stamp duty?

    1. Please find below our answers to your respective query:

      1. In case of transfer of shares by way of sale, following documents are required to be attached: a) Transfer agreement (only relevant extracts), b) Valuation Certificate, c) Declaration by non-resident in prescribed format, d) Acknowledgment of FC-GPR/FC-TRS, as may be applicable, filed at the time of original acquisition or subscription, on the said shares e) FIRC and KYC

      2. As per Foreign Exchange Management (Transfer or Issue of Security by a Person Resident Outside India) Regulations, 2017, the valuation of capital instruments shall be done as per any internationally accepted pricing methodology for valuation on an arm’s length basis which needs to be duly certified by a Chartered Accountant or a Securities and Exchange Board of India registered Merchant Banker. In case of an unlisted Company, it can also be obtained from a practicing Cost Accountant.

      3. Payment of stamp duty in case of transfer of shares is governed by Indian Stamp Act, 1899. The rate of stamp duty for transfer of shares is 0.25 paise for every one hundred (100) rupees of the value of the share or part thereof.

      Further, pursuant to Section 29 of the Indian Stamp Act, 1899 the liability to pay the stamp duty is on the person making or executing the instrument. Hence, Form SH-4 is executed by both transferor and transferee, so the duty to pay the stamp duty is on both i.e. transferor and transferee.

  10. Since, company has suffered heavy losses. The valuation done by CA gives Negative Value and thus shares are transferred at NIL value from NR to R. In this case how will FC-TRS get filed with Nil Consideration with Bank and RBI?

    1. Sir
      If valuation gives negative value, the shares cannot be transferred at a value below than face value. NIL consideration is possible in case of gift only.

      Hence, in your case shares are required to be transferred at face value and FC-TRS shall be filed accordingly. However, in case if shares are transferred by gift, FC-TRS shall be filed as follows:
      1. In field “transfer by way of” select “gift”
      2. In field “Transfer Type” select “Transfer as per Regulation 10(5) of FEMA 20(R)-Gift of capital instruments from a person resident in India, including NRI/OCI or eligible investor under 43 Schedule 4 to FEMA 20(R) to a person resident outside India”
      3. Select nature of transfer as “not applicable”
      4. Enter the details of Doner and Donee
      5. Select the type of capital instrument as “Share transferred as Gift”
      6. Enter conversion ratio as 1:1
      7. Enter the transfer price for gift as “0”
      8. Leave the field “Fair value of the capital instruments” as “blank”
      9. Leave the remittance details blank as the same is not applicable in case of gift

      Please note that other fields shall remain same except for the fields mentioned above.

  11. Respected Sir / Ma’am: Please guide:

    In my case transfer needs to be done by IR to NR, how is valuation required to be done and from whom the valuation certificate / report is required to be taken – CA or registered valuer ? Can you please share the format of such report ?

    1. As per Pricing Guidelines (Regulation 11) of Foreign Exchange Management (Transfer or Issue of Security by a Person Resident Outside India) Regulations, 2017, in case of transfer of shares from Indian Resident (IR) to Non-Resident (NR), the valuation of capital instruments shall be done as per any internationally accepted pricing methodology for valuation on an arm’s length basis and it shall be duly certified by a Chartered Accountant or a Securities and Exchange Board of India registered Merchant Banker or a practicing Cost Accountant, in case of an unlisted Indian Company.

      However, in case of listed company, the price must be as worked out in accordance with the relevant Securities and Exchange Board of India guidelines

  12. What are the compliance which need to be done in case of transfer of shares from Non-resident to Non-resident?

    1. A Non-resident can transfer the shares to another non-resident outside India (held by him in an Indian Company) and in this case approval from RBI / Govt is not required as money is not flowing to India. Simple procedure as prescribed under Companies Act need be followed, which are execution of transfer by way of transfer deed, stamp duty @.25% of the consideration, etc.

  13. Sir, our face value of share is Rs.100. Valuation of share is Rs.92. Can we transfer shares from NR to R @ Rs.100.

    1. In case of transfer of shares from NR to IR, the consideration payable by the IR (Transferee) shall not exceed the valuation of capital instruments done by a registered valuer as per any internationally accepted pricing methodology for valuation on arm’s length basis.

      In short, in case of share transfer from NR to IR, the consideration payable by IR shall not exceed the valuation done by the valuer.

  14. My query is very basis, if NRI does not hold any account in India and maintaining saving account in foreign country, will investment consider as Repatriate or Non Repatriate ?

    1. Investment on repatriation basis means an investment, the sale/ maturity proceeds of which are, net of taxes, eligible to be repatriated out of India.
      If the investment is to be repatriated outside India, then it will be considered as a Repatriable investment. Investment from a saving account maintained in a Foreign Country has nothing to conclude whether the investment is on repatriate or non-repatriate basis, rather the intention of the Investor at the time of investment to bring or send back profits or other assets to one’s own Country (Foreign) will determine whether the investment is on repatriate or non-repatriate basis.

  15. In case of transfer from NR to R:
    1) Buyer is a company, does that require a board resolution authorising any director to sign the consents?

    2) The seller is also a company, does that require any seperate board resolution?

    3)The buying and selling is happening from the NR seller Shareholder in an Indian company X to an Indian company Y; the procedure is still the very same?

    1. 1) & 2) Yes, in case the transferee/transferor is a Company, a Director/any other person must be authorized to sign the Transfer Deed and incidental documents.

      3) We are not clear which procedure you are referring to. However, for transfer, the provisions of section 56 of the Companies Act, 2013, has to be followed. Further, since it is transfer between NR and R, form FC-TRS (SMF) is also required to be filed on FIRMS portal by the transferee.

  16. If more than 1 resident shareholders have sold their shares to a non-resident, should all residents file FC-TRS at the same time or one after another (that is, only after the previous filing is approved)? How long does it typically take to get a approval or rejection from the ADB?

    1. The onus of reporting in FC-TRS falls on the transferor or transferee, whoever is resident. In your case, there are multiple resident transferors, therefore separate reporting has to be done by each transferor (inspite of the fact that there is single transferee).
      The criteria of filing form only after approval/rejection of the previous one is applicable only when it is filed by the same transferor. Since in your case, more than 1 transferor is involved, separate reporting to be done by each of them from their respective IDs. So, you don’t have to wait for previous approval. The form is approved/rejected by the AD Bank within 5 working days from the date of filing.

  17. FC-TRS need to be file by Transferor/ Transferee who is resident in India. As per consolidate FDI policy A NRI can sale share on stock exchange through Register Stock Broker. When NRI sold the listed entity share on stock exchange through stock broker, onus on whom to file Form FCTRS ? 1. Transferor but he is not resident. 2. Transferee, he is resident but we do not know to whom shares sold as transaction was on stock exchange. 3. Investee Company, but how Investee Company will come to know about the transaction as the transaction was on stock exchange. 4. Stock Broker ???

    1. A person resident outside India can transfer their security of an Indian Company by way of sale or gift on a recognized Stock Exchange in India through a stock broker registered with Stock Exchange or merchant banker registered with SEBI.

      As per RBI Notification No.20(R)/Nov. 07, 2017, onus of submission of Form FC-TRS is on the resident transferor or transferee.

      However in case of transfer of shares by a non-resident Indian on a recognized stock exchange, onus of reporting shall be on such non-resident person.
      In your case as the NRI has sold the shares on Stock Exchange.

      Therefore, FC-TRS should be filed by NRI.

  18. Looks like FCTRS form has again moved to RBI site. How can an individual resident investor in an Indian Startup file FCTRS after selling his shares to a non-resident buyer. FIRMS doesnt seem to have a way to create login credentials for non Business User / non Entity user.

    1. FC-TRS can be filed by an individual or a company on Firms RBI. If an individual wants to file FC-TRS, he/she will have to obtain authority letter from the concerned business entity and then create new business user to file the same. Please note that the procedure mentioned in the manual / guide to the FIRMs portal need to be followed till the time RBI clarifies the situation w.r.t. the filings to be made by individuals.

  19. 1. In case of transfer from R to NR, the CA valuation certificate needs to be done before receiving the remittance?
    2. Is any formal request required for such transfer by the R to NR

    1. CA valuation certificate shall be obtained before the remittance is received. However, the valuation shall not be older than 6 months from the date of remittance received.
      Please be more specific about which formal request you are talking about.

  20. If the Indian Company wants to buy-back the shars from the Non-resident Shareholder then:
    1. Is there is need to file FC-TRS?
    2.Is there any RBI approval is required for this?
    3. Is there any pricing guidelines involved for the buy-back of shares by Indian Company?

    Your co-operation would be highly appreciated.

    Thankyou!!

  21. Hi can you specify the exact RBI regulation where it is written company cannot register transfer from R to NR without certified FCTRS. Cause in our case the amount was received in Indian currency from NR but since no amount can come directly to indian bank from foreign it got remitted to some indian bank and then that indian bank did RTGS to beneficiaries account. The resident beneficiaries are trying to get FIRC but the beneficiary banks have already taken more than 60 days to issue FIRC and KYC as they say since amount is received in INR and RTGS no FIRC will be issued and after many deliberation they go convinced that they have to issue FIRC for such transaction.

    1. AD Bank provides you with a sanction letter or certificate if all the documents and information are satisfactory to them. This is a documentary evidence which states that FDI compliances are duly taken care off by the applicant.
      The sanction letter/certificate issued by AD bank is attached with the share transfer form and share certificate and submitted to the Company so that company may take the transfer on its record.

      https://bsamrishindia.com/transfer-of-shares-between-resident-and-non-resident-private-limited-companies/

  22. In case of NR to Resident Transfer,

    1. Do we need to attach NOC from CA even though 15CA part D is filed. (15CB is not applicable)

    2. What are the mandatory attachment in FCTRS in case of NR (Company) to resident (Individual) transfer.

    1. 1. There is nothing prescribed for the format of NOC/tax clearance certificate from a CA. In case 15CA and 15CB are applicable then no separate NOC/certificate is required. In your case if 15 CB is not applicable then a separate Tax Clearance certificate will be required.

      2. All the mandatory attachments are given in our blog. Further, if seller is a company then in addition to general list, a Board Resolution and its Constitution documents are required.

  23. Is there any requirement in case of issue of Shares to Foreign Creditor (Holding Co.) , against their outstanding which they have paid for expenses.

    How you will show the receipt of funds, which directly credited to the Indian Creditors and not received by the company??

    1. As per Schedule 1(1)(3)(b) to Foreign Exchange Management (Transfer or Issue of Security by a Person Resident Outside India) Regulations, 2017, such expenses termed as pre-incorporation expenses, can be capitalised by way of issue of shares. To this effect, a certificate is needed from the statutory auditor of the Indian company stating that the amount of pre-incorporation/ pre-operative expenses against which capital instruments have been issued has been utilized for the purpose for which it was received should be submitted with the Form FC-GPR.
      Please note that as per the regulations, only pre-incorporation expenses can be capitalised.

  24. IS FC-TRS is required, When a non Resident director is gifting the shares to other Resident Director in India.

    1. Yes, filing of FC-TRS is required because even though there is no consideration involved (since it ia a gift), reporting is required as there is transfer of shares held on repatriable basis to non- repatriable basis.

  25. Non resident has transferred shares to 2 indian resident amounts to Rs. 450 , so we need to take tax clearance certificate for this transaction?? and tax clearance certificate is required every time when transfer from resident to non resident and vice versa.
    Please reply.
    Thanks in advance.

    1. As mentioned in regulation 12 of Foreign Exchange Management (Transfer or Issue of Security by a Person Resident Outside India) Regulations, 2017, all transaction under these regulations shall be subject to payment of applicable taxes and other duties/ levies in India irrespective of the amount remitted.
      Therefore, it is mandatory to obtain tax clearance certificate from either Income tax Authority or from the Chartered Accountant

  26. Is there any time limit within which the shares should be transferred from resident to non resident after receipt of consideration

  27. We have submitted form fctrs thru ebiz portal and dept. has asked for some documents / clarifications. At the time of providing the clarification / documents, erronously we have filed a new application form and submitted the same also instead of giving the details in the first one. After realising, we have updated the 1st application and filed. Now, what is the procedure for withdrawing the 2nd application formwhich has been filed erronously. Please guide at the earliest.

  28. We have recevied remiitance on 01.07.2017 and effected a transfer on 30.07.2017. AD is askin us why the shares are trasnfered after receipt of money. is it even a valid question by bank.

  29. Any RBI implications if shares are transferred from one NRI to another NRI.

    Is FC-TRS Required for that?

  30. Please provide the format of declaration from the buyer to the effect that he is eligible to acquire shares/compulsorily and mandatorily convertible preference shares/debentures under FDI policy and the existing sectoral limits and pricing guidelines have been complied with incase of transfer of shares from non-resident to resident Indian

    1. There is no specified format for such a declaration. It may be mentioned in the declaration that the NR Transferee is eligible to acquire shares. It is not a transfer relating to shares of a company engaged in financial services sector or a sector where general permission is not available. Also the fact that there is no sectoral limit under FDI policy and the fact that pricing guidelines have been adhered to.

  31. Hi,

    If shares are transferred from NR to NRI and consideration is paid from NRE account, then please reply if the below needs to be complied:

    1. Whether FC-TRS to be filed?
    2. Whether valuation certificate is required and as per which method?
    3. If no valuation is required, can the transfer be done at face value?

    Thanks

    1. As per Regulation 13(4) of Foreign Exchange Management (Transfer or Issue of Security by a Person Resident Outside India) Regulations, 2017, Form FCTRS shall be filed for transfer of capital instruments between:

      (1) a person resident outside India holding capital instruments in an Indian company on a repatriable basis and person resident outside India holding capital instruments on a non-repatriable basis; and
      (2) a person resident outside India holding capital instruments in an Indian company on a repatriable basis and a person resident in India.

      With the limited facts, we are unable to say whether FC-TRS to be filed or not. Please consult a Professional with detailed facts.

      For Valuation point, you may see the regulation 11 of Foreign Exchange Management (Transfer or Issue of Security by a Person Resident Outside India) Regulations, 2017.

  32. Hi,

    In case of a NR to R transfer, does the seller needs to have a PAN to pay the capital gain tax or the buyer/any person can pay taxes on behalf of the seller?

    What is the tax rate for LTCG & STCG?

    Thanks

    1. It is not necessary for the seller to have pan card for the purpose of Depositing the LTCG or STCG with the Income Tax Dept. Resident Buyer may deduct the tax on behalf of the Non-Resident Seller at the time of making the payment in the form of Tax Deducted at source (TDS) and deposit the same with the Income Tax Dept. Earlier, there is no LTCG on sale of shares of listed Companies but as per the Finance bill 2018-19, with effect from 1st April, 2018 Rates of LTCG shall be 10% with effect while STCG on sale of shares shall be charged @ 15%.

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