I am a US citizen, resident of US. I am a considering becoming a shareholder in a trading company registered in India. What is the best way for me to receive profit distributions or dividends? If I obtain a PAN number in India will I pay taxes in India or still have to pay taxes in the US and claim a foreign taxes paid credit against my Indian tax withholding?

I cannot address the Indian tax implications, but as a U.S. citizen, then dividends earned in ANY compnay is subject to U.S. taxes.

In India the receiver of dividends does not pay any income tax. It is tax free income. The company that distributes the dividends pays 15% dividend distribution tax.