If shares are purchased in foreign currency, capital gain is calculated in foreign currency and then converted into Indian currency. In this case, benefit of indexation of cost is not available, however, the applicable tax rate shall be 10% plus applicable surcharge and cess.
Tax Rate. Accordingly, the long-term capital gains on foreign stocks would be taxable at 20% after claiming the benefit of indexation whereas the short term capital gains would be taxed as per the slab rates applicable to the Indian investor.
Is indexation available to NRI?
For NRIs, LTCG on equity and equity-oriented investments is taxable at 10 per cent exceeding Rs. 1 lakh exemption. Securities transaction tax (STT) must have been paid to sell equity shares or equity-oriented units. Remember, no indexation benefit is allowed on the cost of acquisition for equity-oriented investments.
How do you declare foreign stocks?
ITR Form. The tax-payers (non-business cases) who have invested in foreign stocks (assets) have to mandatorily file ITR in ITR-2 since they have to report such foreign investments in Schedule FA of the ITR-2.
Indexation helps to incorporate the time value of money (with adjustment of the inflation factor) in the calculation of LTCG on shares to ensure that the gains are computed according to the current value of money. Indexation uses the Cost Inflation Index (CII) with 1.4. 2001 as the base year.
How is foreign investment taxed?
Financial assets held by foreigners are not subject to U.S. capital gains tax. Dividends and interest will be subject to a withholding tax at a rate of up to 30% (usually reduced to 10% or 15% by treaty). This withholding tax, however, can usually be recovered as a tax credit in the country of residence.
In contrast to dividend income, you will usually not find capital gains tax imposed on sales of foreign stocks. You will simply need to pay your UK capital gains tax at the usual rate. If tax is deducted from your proceeds, you should be able to obtain Foreign Tax Credit Relief against any UK liability.
Is capital gain taxable in India?
Long-term capital gains are taxed at 20%. For a net capital gain of Rs 63, 00,000, the total tax outgo will be Rs 12,97,800. This is a significant amount of money to be paid out in taxes.
How can I avoid capital gains tax on mutual funds in India?
How to manage LTCG tax on Equity Funds
- Ensure a complete understanding of the equity fund scheme before making an investment decision. …
- Avoid frequent buying and selling of units of the equity fund. …
- Select only those equity funds that have a track record of performance for an extended period (at least five years).
Do I need to declare foreign investment?
All of your worldwide income must be reported to the IRS. This includes regular salary and foreign investments. You must report your foreign investments even if you did not receive end-of-year forms for your investments. The IRS requires all US Citizens to file an annual US income tax return.
Do I need to declare foreign stocks in ITR?
12 min read. Any resident individual holding equity or debt interest in the entity located in the U.S. needs to disclose about the same in the income tax return in India. The Indian income tax law requires mandatory filing of the income tax return for the resident individuals who hold specified foreign assets.
Do I need to declare foreign assets?
If you are a taxpayer living abroad you must file if:
You are filing a return other than a joint return and the total value of your specified foreign assets is more than $200,000 on the last day of the tax year or more than $300,000 at any time during the year; or.
Sell your shares or mutual funds just before it makes a profit of Rs. 1 lakh and book your profits. This way, your gain will be exempt from LTCG tax. There are no regulations in buying the same shares and mutual funds again, right after booking the profit.
What is Ltcg and Stcg?
Among the various incomes that are reported when you file your income tax returns, capital gains is one of the key components. Intuitively, while long term capital gains (LTCG) refers to a longer holding perspective, at the shorter end is short term capital gains(STCG).
Is STT allowed as deduction?
In case of person who is trading in securities and offering income/loss from such trading as business income, STT paid is allowed to be deducted as business expense.