NRI taxes: when anti-abuse rules don't bite

Tve been living in Dubai for 10 years and trade shares globally full time. In India, I also trade in unlisted stocks. Recently, I bought and sold shares of an unlisted Indian company within a few days through my NRO account, at prices below those quoted on popular websites. Will there be any tax implications in India for trading below market prices? —Namewithheld on request

- Harshal Bhuta

Since you have mentioned that you are actively engaged in global trading in shares, it can be assumed that such trading forms part of your regular business activity. Accordingly, the shares acquired by you in India will be regarded as stock-in-trade, not as investments or capital assets held for long-term appreciation. In Indian income tax law, merely acquiring shares of an Indian firm does not create an immediate tax obligation. But, there’s an anti-abuse provision that taxes the receipt of certain specified property—either without consideration or for a consideration lower than its fair market value (FMV)—in the hands of the recipient.