Capital gain tax on share listed outside India

POSTED BY om sharma ON March 10, 2014 4:34 pm COMMENTS (6)

Hi

I work for a MNC listed on NYSE. The company gives its employees some retain shares which vested that year. I have received such shares from the company for 2010, 2011, 2012 and 2013. When these shares vested the company deducted income taxes in and transferred these shares to another company who deals in share markets there. Last year I sold all shares as I wanted to invest in a property in India. I received an amount after paying all charges applicable there.

I made capital gains on selling these shares but I am confuse how should my tax liabilities should be calculated. Will gain on shares i held for less than a year  be treated as short -term capital gain and gain on those i held for more than a year as long-term capital capital gain and taxed accordingly. I know in India  short term capital gain tax is 15% in case of shares/ MF, and there is no taxes on long term capital tax. Will the same be applicable for shares listed in overseas market? If not then could you please advice me how to calculate taxes on these gains.

6 replies on this article “Capital gain tax on share listed outside India”

  1. ashalanshu says:

    Dear Om, if you opt to pay before 31st March, no interest is there but post 31st March, you are liable to pay interest on delay in advance/actual tax payment.

    Thanks

    Ashal

  2. om sharma says:

    Hi Ashal

    Thanks for replying

    Just wanted to clarify it was not ESOP in my case. so using the same example you gave …I got stock at 100, which was market price the day it vested and my employer deducted tax @100 at that value then. But I sold it at say 120. So I will have to pay tax on gain which is 20 per share here.

    Second, do I need to pay this before 31 March 2014. What if I pay before 31 July the last day of filing return… what are implications I mean.

    Thanks
    Om

  3. ashalanshu says:

    Dear Om, in case of stocks given to you at discounted price than market price, the difference in price is counted as a taxable perk and you need to pay tax on it. This tax liability was already taken care off by your employer in past years at the time of vesting of stocks to you. Let me put it with an example. Say on vesting date, the market price is 100 Rs. (I know it’s US listed but for example purpose using Indian currency) now same is given (vested) to you at 40 Rs. only. Now this difference of 60 Rs. in market price and vesting price is your taxable perk and your employer applied TDS at vesting date.

    Now post this perk taxation, stock price for you is same 100 Rs. Now if you sold the stock later on @ 120 Rs. 20 Rs. is your capital gain. Based upon your holding period, it ‘ll be counted as STCG or LTCG. So now you need to pay tax on your Capital gain part.

    Thanks

    Ashal

  4. om sharma says:

    Sorry one small correction…. I wanted to say that Indian unit of my company deducted income tax every year while I was withholding these share.

  5. om sharma says:

    Hi Ashal

    Thanks for replying so quickly. But please reply two follow up questions.

    First, I paid income taxes every year in India on the market values of the share vested during that year, after converting the USD figure into INR figure (simply by multiplying exchange rate of the date on which shares vested). My employer deducted that tax as TDS, while withheld shares. Do such tax payments will be a factor while calculating capital gain tax whether it is short term or long term.

    Second, does indexation factor applicable in case of shares or its is only for assets like gold, house etc ?

    Thanks
    Om

  6. ashalanshu says:

    Dear Om, as the stocks are not listed in India, the LTCG is taxable at 10.3% without indexation or 20.6% with indexation. The STCG ‘ll be taxed at your slab rate. Any Capital Gain tax paid in US is available for set off under Indo US DTAA from your Indian Capital Gain Tax liability.

    Thanks

    Ashal

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