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To give a brief history, I am Indian citizen based in India and I worked for a technology start-up in India, it was a US based company which had its branch office in Hyderabad, India. Company was not public and I had purchased shares in employee stock options. Now this company is getting sold to another US based company and they are paying off all the shareholders.

My question is :
What is the tax implication of this transaction in US?
What form do I need to fill?
Is the tax applicable for full capital gain?
As I need to pay taxes ( 30% ) in India, is there any way I can minimize my tax liability in US?

I live in India, and I have never lived in US.

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  • Where are you? Are you in India?
    – littleadv
    Commented Jul 18, 2014 at 5:17
  • Yes, I live in India, and I have never lived in US.
    – kumar
    Commented Jul 18, 2014 at 9:01

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Assuming you're in India, you purchased the stocks in India, and you're selling the stocks in India - I see no reason why would you even think that you need to pay taxes to some other country.

The fact that the company is organized in the US affects only one thing: dividends. When a company pays dividends to foreigners it must withhold X% (30% by default, but the Indo-US tax treaty defines a much lower percentage) that goes to the IRS in the name of the shareholder. The shareholder then needs to claim a refund of the amounts above the actual liability (which is many times nil).

But a sale of property you bought in India, held in India and are selling in India - has nothing to do with any other country. The fact that the property was made in the US is entirely irrelevant. Whatever taxes the US wanted - it could only ask for them until the property was exported (i.e.: given to you).

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