« Top Headlines » Open DEMAT Account in 24 hrs  Tax planning for 2025: How to maximise your savings before March 31 deadline  New income tax bill reaches Parliament: Finance Minister Nirmala Sitharaman tables I-T Bill 2025 in Lok Sabha  5 major changes in the last 6 months every taxpayer should know!  Good news for taxpayers: ITR forms updated to allow 87A tax rebate claims, but there's a catch  Top 10 income tax changes from 2024 to look out for while filing ITR in 2025 «  Taxmen demand better deal... More private sector cos enter top advance tax payers list... » MNCs get tax breather on asset sale October, 05th 2007 Foreign companies selling assets in India could end up enjoying a concessional rate of capital gains tax of 10% even if these companies enjoy the foreign currency fluctuation benefit. This follows the ruling by the Authority for Advance Rulings (AAR) in the Timken (France) case, where it has held that foreign companies will be eligible for concessional tax rate of 10% on capital gains made on any asset purchased in foreign currency. Normally, companies have to pay a capital gains tax of 20% if they opt for the forex cover, which protects them from the volatility of the currency. Timken SAS of France which sold off its shares, including bonus shares, in NRB, a listed company in the Indian bourses, had sought the AARs ruling on the capital gains tax rate. The transaction was an off-market one. Though the AAR ruling will be binding only in the case of Timken, it has advisory value. The judgement could be cited as an example by any assessee in future. Computation of capital gains is laid out under Section 48 of the Income Tax Act. This section details various provisions like indexation benefit and foreign currency fluctuation benefit that are taken into account while computing the capital gains tax liability for a company. Typically, the capital gains tax differs between 10% and 20%, depending on the options availed. For instance, a company is liable to pay capital gains tax at a rate of 20% if it avails the indexation benefit. Indexation is the process by which the cost of acquisition of capital asset is marked to represent the cost levels existing in the year the capital asset is sold. Cost normally keeps increasing from year-to-year because of inflation. Every year, the finance ministry notifies the Cost Inflation Index for that year, which is used in calculating indexation. A company is exempted from long-term capital gains tax if the transaction was liable for the securities transaction tax. But in this case, since the transaction was off-market and no STT was paid, it was liable for a long-term capital gains tax.