 Capital Gains-NRI |
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The profit on sale of capital asset, shares, bonds, units of UTI and mutual funds, immovable property etc is taxed as under:
The capital gains are segregated into long-term capital gains and short- term capital gains in following manner:
Capital Asset |
Short-term Capital Gain |
Long-term Capital Gain |
Equity shares, and listed securities, units of Unit Trust of India or mutual funds or equity-oriented mutual fund |
If asset is held for a period not exceeding 12 months from the date of acquisition. |
Capital asset which is not a short-term capital assets is long-term capital asset |
All other investments and immovable property. |
If asset held for a period not exceeding 36 months from the date of acquisition. |
Capital asset which is not a short-term capital assets is long-term capital asset |
NRI is required to compute Capital Gains as under
Investment in |
In Indian Rupees |
In Forex
(If Investment is on repatriation basis) |
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If Invested from Non repatriable funds |
Calculation in Rs |
Calculation in Forex |
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(A) |
(B) |
(C) |
Sales proceeds |
50,000 |
50,000 |
$ 1,111(@45.00) |
Less : Cost of Acquisition |
30,000 |
30,000 |
$ 778 (@38.56) |
Capital Gains |
20,000 |
20,000 |
$ 333
(= Rs 14,985 @ 45) |
NRI can compare capital Gains under (B) & (C) and select the method where tax is least.
For Long Term Capital Gains
--Under A, Tax rate is 10% or 20% if indexation benefit is claimed
Under B and C rate of tax is 10%
For Short-Term Capital Gains, the rate of tax is 30% under A, B and C
As per amendment in the Finance Act, 2004, Capital Gains arising from equity shares and equity-oriented mutual fund units sold on recognised stock exchange in India is taxable as under:
| Nature of Capital Gains |
Tax Rate |
Long Term Capital Gains |
Nil (Exempt) |
Short Term Capital Gains |
10% |
NOTE: All the above rates shall be further increased by surcharge of 10% if income exceeds Rs 1,000,000 and further by 2% by way of education.
CAPITAL GAINS TAX EXEMPTIONS ON REINVESTMENT
NRIs are entitled to claim exemption from tax if they reinvest long-term capital gains/net sale consideration into following assets.
LONG TERM ASSET SOLD |
REINVESTMENT IN |
CONDITIONS |
EQUITY SHARES/ SECURITIES OR UNITS OF MUTUAL FUND |
(A) TAX SAVING BONDS |
BONDS
National Housing Bank (NHB)
National Bank for Agriculture and Rural Development (NABARD)
Rural Electrification Corporation Ltd. (RECL)
Small Industries Development Bank Of India (SIDBI)
National Highway Authority (NHA)
- Investment is to be made within Six months of transfer.
- Minimum lock in period is 3 years.
- You can not borrow against security of these Bonds
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(B) SUBSRIPTION TO PUBLIC OFFER OF EQUITY SHARES BY INDIAN COMPANIES |
- The capital gains should be on account of transfer of listed equity shares/securities or units
- Investment should be within 6 months of transfer.
- Minimum lock in period is 1 year
- On new shares benefit of rebate u/s. 88 shall not be allowed.
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(C) RESIDENTIAL HOUSE |
There are many conditions, which shall be provided at request. |
EQUITY SHARES/ GOVT. SECURITIES PURCHASED IN FOREX. |
ALL THE ABOVE ASSETS |
CONDITIONS APPLICABLE |
- SHARES IN INDIAN COMPANY
- DEBENTURE OF/ DEPOSITS WITH INDIAN PUBLIC COMPANY.
- GOVT. SECURITIES
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- Investment is to be made within 6 months of transfer.
- Minimum lock in period is 3 years.
- You cannot borrow against security of these reinvested assets.
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RESIDENTIAL HOUSE |
RESIDENTIAL HOUSE |
There are many conditions, which shall be provided at request. |
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