A Russian parent can exit by selling the Indian shares, by a buy-back, by a merger, or by closing the company through voluntary liquidation or strike-off. Gains on Indian shares are taxed in India under the treaty. A long-term gain on unlisted shares held more than 24 months is taxed at 12.5%. Under FEMA, a purchase from a non-resident cannot be above fair value, and a sale to a non-resident cannot be below it. Report the transfer on Form FC-TRS within 60 days and obtain tax clearances before the money leaves. For Russian sellers the extra points are the buyer's sanctions position, the payment route and the Russian currency and tax treatment of the proceeds.
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Key facts
| Share sale | Gain taxed in India; 12.5% on unlisted shares held more than 24 months, normal rates for shorter holdings |
|---|---|
| FEMA pricing | Purchase from a non-resident cannot be above fair value; sale to a non-resident cannot be below fair value |
| Reporting | FC-TRS within 60 days of the transfer |
| Buy-back | Company buys its own shares; check the current tax treatment, which has changed in recent budgets |
| Closure | Voluntary liquidation or strike-off; clear tax, labour and GST first |
| Treaty | Gains on Indian shares taxable in India; check the principal purpose test |
| Buyer checks | Sanctions screening of the buyer and the payment route |
| Russian side | Tax and currency treatment of the proceeds; confirm with Russian counsel |
Exit routes compared
| Route | India tax | FEMA and filings | Notes |
|---|---|---|---|
| Sale of shares to an Indian buyer | Capital gains on the Russian seller; withholding on the price | Price not above fair value; FC-TRS within 60 days | Negotiate escrow and deferred consideration within RBI limits |
| Sale to another non-resident | Capital gains if Indian shares are transferred; indirect transfer rules may apply | Price not below fair value; FC-TRS | Screen the buyer and funding |
| Buy-back by the company | Tax on the shareholder depends on current law; confirm | Pricing and sources of funds under the Companies Act | Limits on size and timing |
| Merger or demerger | Tax-neutral only if the conditions are met | FEMA compliance on shares issued; NCLT process | Longer and more complex |
| Voluntary liquidation | Distributions taxed; liquidator process | Remittance of surplus through the bank | Months to complete |
| Strike-off | Only for dormant companies without liabilities | Registrar process | Not a way to avoid unpaid tax |
Tax on the exit
- A long-term gain on unlisted Indian shares held more than 24 months is taxed at 12.5% for a non-resident; a shorter holding is taxed at the normal rate. See the DTAA guide.
- The buyer deducts Withholding Tax on the payment to a non-resident seller; a lower deduction certificate can fix the rate in advance.
- Indirect transfers of shares of a foreign company that derives its value from Indian assets can be taxed in India.
- Russia taxes the gain according to its own rules with credit for Indian tax; confirm with a Russian adviser.
FEMA pricing and reporting
- On a sale by the Russian parent to an Indian resident, the price cannot be higher than fair value.
- On a sale to another non-resident, the price cannot be lower than fair value.
- Report the transfer on Form FC-TRS within 60 days with the valuation and bank certificates.
- Use the authorised dealer bank for the remittance, and agree the receiving bank route in advance. See sanctions and payments.
Closing the company
- Settle employees, provident fund, gratuity and notice obligations.
- File final returns and clear GST, income tax and transfer pricing matters.
- Hold the shareholder resolution, appoint a liquidator and complete the declaration and process, or apply for strike-off if eligible.
- Close bank accounts and remit surplus with proper tax forms.
- Deregister from labour, tax and customs systems.
Restructuring within the group
Moving the Indian shares to another group company, or a change in the Russian ownership chain, can trigger Indian tax, FEMA pricing, bank due diligence and sanctions questions. Take advice before moving. See structure options.
Official sources
Check the rules at the primary sources: Income Tax Department (India), Reserve Bank of India, Ministry of Corporate Affairs, Federal Tax Service (Russia), Bank of Russia and the Ministry of External Affairs (India).
Frequently asked questions
How is a share sale by a Russian parent taxed in India?
The gain is taxed in India. For unlisted shares held more than 24 months the long-term rate is 12.5%; a shorter holding is taxed at the normal rate.
What is the FEMA pricing rule on exit?
A purchase from a non-resident cannot be above fair value, and a sale to another non-resident cannot be below it.
Which form reports the transfer?
Form FC-TRS within 60 days of the transfer.
Can I do a buy-back?
Yes, within Companies Act limits. The tax treatment has changed in recent budgets, so confirm the current rule.
How long does voluntary liquidation take?
Usually several months, depending on tax clearances and the creditor process.
Can I strike off an operating company?
Strike-off is for dormant companies without liabilities and is not a substitute for a proper liquidation.
Can the sale proceeds be sent to Russia?
Through the authorised dealer bank with the tax forms, if the receiving bank route is acceptable. Plan the route before signing.
Related guides
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The India-Russia tax treaty explained for a Russian parent: 10% dividends, interest, royalties and fees for technical services, permanent establishment, share gains, credit method, the MLI principal purpose test and how to claim treaty rates.
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The practical gate for Russian investors in India: US, EU and UK sanctions screening, the 50% ownership rule, Indian bank due diligence, settlement channels including rupee vostro accounts, why non-dollar payments are not a safe harbour and a compliance checklist.
Read the guide →Twelve Common Mistakes Russian Companies Make in India and How to Avoid Them
The most common mistakes of Russian companies entering India: ignoring banking and sanctions, skipping Russian clearance, late FEMA filings, weak treaty paperwork, secondment tax errors, unauthenticated documents, unstamped contracts and ignoring the Indian calendar.
Read the guide →Sources
Last updated 26 October 2026. General information only, not legal or tax advice. Indian and Russian rules change often; confirm current requirements before acting.