UPSC CSE Prelims
Question 75
Which one of the following situations best reflects "Indirect Transfers" often talked about in media recently with reference to India ?
View correct answer and explanation
Correct answer: D
Correct Option: D (A foreign company transfers shares and such shares derive their substantial value from assets located in India)
Explanation: Indirect transfer taxation arises when an offshore share transfer derives substantial value from assets in India, even if the direct share sale occurs abroad.
Option-wise Analysis:
A. Incorrect-Indian investment abroad and foreign taxes are not the indirect transfer of India-linked underlying assets.
B. Incorrect-A foreign company merely investing in India and paying home-country tax does not identify an offshore transfer of India-situated value.
C. Incorrect-Selling an Indian company’s directly owned foreign tangible assets is not the specified offshore share transaction.
D. Correct-selling shares of an overseas company with substantial underlying Indian assets is the indirect-transfer fact pattern.