Capital Gain Tax on stocks sold outside India

POSTED BY Aravind ON February 5, 2013 11:49 pm COMMENTS (22)

I’m a residing indian having stocks listed in a foreign stock exchange that was acquired through my company by monthly salary deduction. Now If I sell them, how should I compute captial gain tax? Is there any exemption if it is re-invested in real-estate?

22 replies on this article “Capital Gain Tax on stocks sold outside India”

  1. Rudresh says:

    Contact any CA, they’ll guide you.

    1. Hi Rudresh

      We also have a CA partner incase you want to explore that, Just fill in your details here and they will give you a complimentary call back

      https://www.jagoinvestor.com/solutions/ca-services

      Manish

  2. Gaurav says:

    Hello,

    can we nullify the capital loss from indian shares and capital gain from US shares

    1. I dont think its allowed like that

  3. Babu says:

    I sold stocks after 2 years of vesting on my account. So will it be STCG or LTCG?

    I heard it is LTCG for listed company if stocks sold more than a year.

    Please clarify it.

  4. Sarangarajan Tirucherai says:

    Following is my question
    RSU received (after adjusting for tax) on 10-Dec-2013 and 10-Mar-2013 are 20 & 20. If on 10-Dec-2013 share prices was 30USD and on 10-Mar-2013 it was 32 and if I sell at 35 today — can we use Cost of Index to arrive at todays purchase price and then calculate the short term tax
    Purchase price for 10-Dec-2013 shares = 20 Shares * 30 USD * 939/852 (cost of index) = 661 USD
    Purchase price for 10-Mar-2013 shares = 20 Shares * 32 USD * 939/852 (cost of index) = 705 USD
    Total Sale value = 40 * 35 = 1400 USD
    So net Gain/loss = 1400 – 661 -705 = 34 USD (assuming no cost for transfer)
    So do I pay 30.09% of 34 USD * today’s USD to INR currency conversion
    Please clarify whether the above method is correct.
    Thanks and Regards
    Sarang

  5. Dear Arun, yes is the answer.

    Thanks

    Ashal

  6. arun says:

    Thanks Ashal for the response.

    As per my earlier post, the ESOP allotment was done in July 2010 with a 4 year vesting period. With assumption of total 400 Shares alloted, 100 was vested in July 2011 and another 100 in July 2012.

    I have excercised option to sell the 200 that had been vested in Jan 2013.

    As per you statement in last post, the actual allotment of shares date would be considered as July 2010, so would fall under the Long term capital gains. And if i do not consider indexation, then i need to pay tax at 10.3 %

    Please correct me if the above understanding is not correct.

    Thanks
    Arun

  7. Dear Arun, the STCG ‘ll arise for the shares where the holding period is less than 1Y & this STCG ‘ll be added into your income from all other sources & ‘ll be taxed at your slab rate. For the shares held for more than 1Y, the gains if any ‘ll be LTCG & you have the option to chose paying tax either @ 10.3% with out indexation or 20.6% with indexation.

    In your original query, actual allotment of shares ‘ll decide your possession date.

    Thanks

    Ashal

  8. arun says:

    The perquisite allocation and taxation have happened once i sold the shares in Jan 2013.

    Would like to know some simple queries

    Would shares sold outside india (US exchange) which do not have STT paid, will it have short term / long term capital gains concept. If yes, what would be the tax for short term gain and what would be for long term gain.

    Some people i have asked have responded saying that we need to pay tax at the tax slab that we are at. However, the response from Manish earlier seemed to indicate some other tax percent (20% and 10%).

    Thanks
    Arun

  9. Dear Arun, when did the perk value & taxation happened? In 2010 or 2012?

    Thanks

    Ashal

  10. Dear Arvind, yes anything less than 1Y holding ‘ll be considered for STCG where as anything more than 1Y ‘ll be LTCG. On a simple note, shares purchased till Feb 2012, ‘ll be considered Long Term Holding & March 2012 onwards Short Term Holding (Here I assume, you are selling your shares in March 2013).

    Thanks

    Ashal

  11. Dear Aravind, if you are asking to avail tax exemption under section 54F, yes that’s possibole for your foreign stocks but in this case STCGs set off is not allowed, as section 54F deals specifically with LTCGs on capital assets other than a residencial property.

    Thanks

    Ashal

    1. Aravind says:

      Thanks Ashal!

      Yes i’m refering to section 54F. In this case i’ve accured the stocks on monthly basis for past 5 years. Now on selling them all together would the portions bought before 1 yrs will be considered as LTCG and that bought within 1 yr as STCG?

  12. Dear Aravind, what’s your query?

    Thanks

    Ashal

    1. Aravind says:

      Hi Ashal,

      My Query is how to compute captial gain tax for selling foreign stocks? Is there any exemption if it is re-invested in real-estate?

      Thanks,
      Aravind

      1. The calculation is done in the same way like a stock is not registered on a STOCK Exchange and STT was not paid , so

        If its sold before 12 months of acquiring them, its STGG (added to income and taxed at your slab rate)

        And if its more than 12 months, then indexation will apply (20% with indexation and 10% without indexation)

        Manish

        1. Aravind says:

          Thank you Manish!

          If I re-invest the fund to real-estate, is it exempted from tax?

        2. arun says:

          Hi Manish

          Have a similar situation at my end also and would like some additional clarifications.

          Shares were given to me as bonus in July 2010 to be vested in 4 yrs. The first lot (say 100) got vested in July 2011, the second lot (100) in July 2012 and i sold the 200 shares in Jan 2013.

          Company has calculated perquisite based on Fair Market Value and cut tax on the same at 30.9%. The additional sum received is around 55K which is to be treated as capital gains.

          Now since i have sold shares outside of India, these would be taxed. But am not clear on the issue of when would it considered as acquired. Would all allocated shares in 2010 be considered as the acquired date or would it be the date on which they were vested (i.e. me being able to exercise the option to sell them). If its the latter, then would second set of 100 shares (vested in July 2012) be taxed at tax slab rate and the first lot of 100 shares (vested in July 2011) at 20% with indexation and 10% without.

          I also am unaware of the concept of indexation. Would be nice if you could provide any links to understand the same.

        3. sandeep6883 says:

          Is it still 1 year? or similar to Debt funds where LTCG is applicable only after 3 years? (As changed in last years budget)

    2. Avinash says:

      I was given shares as a part of my compensation package in 2006. I left the company in 2008 as the company ion India was sold. I received the shares in 2008 and based on the market valuation, I paid taxes on the acquisition of these shares. Now after 7 years I would like to sell these shares and bring the US dollarsto India. What kind of taxes am I expected to pay.

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