Income Tax on Foreign Shares

author portrait

Sakshi Shah

Capital Gains
Foreign Shares
ITR-2
Trading Income

If a person resident in India has invested into shares listed in foreign countries, profit or loss on the sale of such shares should be reported in the ITR and the assessee must pay tax on this income. The tax treatment varies based on whether the shares are listed on a recognized stock exchange in India and whether STT on such shares is paid.

ITR for Residents with Foreign Income
CA Assisted Income Tax Return filing Plan for Resident Individuals having foreign income.
[Rated 4.8 stars by customers like you]
ITR for Residents with Foreign Income
CA Assisted Income Tax Return filing Plan for Resident Individuals having foreign income.
[Rated 4.8 stars by customers like you]

Income Heads for Trading in Foreign Shares

Capital Gains Income from Foreign Shares

Income from the sale of foreign shares is a Capital Gains Income as per the Income Tax Act. Foreign Shares is not listed on any recognised stock exchange in India. The period of holding is 24 months.

Have any questions ?
Have any queries for trading income, ask us on TaxQnA and we will answer it in the simplest way!
Have any questions ?
Have any queries for trading income, ask us on TaxQnA and we will answer it in the simplest way!

Other Income from Foreign Shares

Income Tax on Foreign Shares

Income Tax on Trading in shares of foreign countries is similar to the tax treatment of other capital assets. The following are the income tax rates on the sale of listed and unlisted foreign shares.

Type of Security Period of Holding Long Term Capital Gain

Short Term Capital Gain

Listed Foreign Share 24 months 20% with Indexation Slab Rates
Unlisted Foreign Share 24 months 20% with Indexation Slab Rates

ITR Form, Due Date and Tax Audit Applicability for Sale of Foreign Shares

File Your Tax Return

On Time , Online on Quicko.com

Open Your Account Today

File Your Tax Return

On Time , Online on Quicko.com

Open Your Account Today

Check Tax Audit Applicability u/s 44AB
Check Income Tax Audit applicability u/s 44AB to file Tax Audit Report Form 3CB - 3CD with your Income Tax Return.
Explore
Check Tax Audit Applicability u/s 44AB
Check Income Tax Audit applicability u/s 44AB to file Tax Audit Report Form 3CB - 3CD with your Income Tax Return.
Explore

Carry Forward Loss for Sale of Foreign Shares

Import Your Trades
File ITR Online

India’s fastest growing Tax Filing Platform

[Rated 4.8 stars by customers like you]

Import Your Trades

File ITR Online

India’s fastest growing Tax Filing Platform

[Rated 4.8 stars by customers like you]

FAQs

How do I report income from sale of shares of Foreign Company in the Income Tax Return?

The investor should file ITR-2 and report income from the sale of Foreign Shares as Capital Gains.
(a) Listed Foreign Shares
LTCG – 20% without indexation
STCG – slab rates
(b) Unlisted Foreign Shares
LTCG – 20% with indexation
STCG – slab rates
The details of Foreign Shares should be reported in Schedule FA i.e. Schedule Foreign Assets of the ITR. The assessee can set off LTCL with LTCG and STCL with both STCG and LTCG. The remaining loss can be carried forward for 8 years.

I am an Indian Resident. Do I need to pay Income Tax on income from the sale of foreign shares?

A Resident as per the Income Tax Act should pay tax on global income i.e. income in India and outside India. Thus, you must report income from the sale of foreign shares as Capital Gains Income and pay income tax on it as per rates below:
– Long Term Capital Gain – 10% without Indexation on sale of listed foreign shares and 20% with indexation on sale of unlisted foreign shares
– Short Term Capital Gain – pay tax at slab rates

  • Rohan says:

    I am a permanent indian resident. I want to receive foreign income by the stock trading outside India. In which bank account will I open? NRE bank Account is eligible for NRI.

    • Anushka Shah says:

      Hello Rohan, Since you hold the status of a resident, your global income is taxable. Thus, you must report the income on sale of foreign shares and pay tax on it at applicable rates. To read more about taxation on NRO and NRE Account, refer to this article – Guide: Income Tax for NRO and NRE Accounts

  • ROHIT GUPTA says:

    I need to know income tax provisions for calculation of capital gains in respect of Shares purchased in foreign currency. Shares were purchased in Singapore for 1000 USD on 1 April 2015 and sold at 1200 USD on 20 may 2019. Exchange rate on 1st April 2015 is 65 and on 20 may 2019 is 71. Capital gains will be 71×200 = 14200 or 85200 minus 65000 i.e. 20200. Please help

    • Maharshi Shah says:

      You need to calculate the sales value and the purchase value as per the exchange rate on the date of sale or purchase. Therefore, capital gains would be INR 20200 as per the second calculation.

  • sanjay kumar says:

    I had RSU/ESPP stock of a company listed in NASDAQ. I had booked the profit and sold in OCT 2019.
    My query is grandfathering applicable to foreign stock?
    Also can I set off LTCG from foreign stock against long term loss happen to indian stocks ?

    • Maharshi Shah says:

      Grandfathering rule as per section 112A is applicable to equity shares and equity-oriented mutual funds on which STT is paid. Thus grandfathering is not applicable to the foreign stock. Long term capital loss from an Indian stock can be set off against long term capital gain from foreign stock.

  • rishi says:

    Hello,
    Thanks for the informative article. But for a foreign unlisted share to be treated as long term asset, it has to be held for 36 months, correct? Or was it changed from 36 to 24 in a recent budget?
    Also w.r.t the table shown in article, isn’t there a benefit of indexation for both long term listed and unlisted shares? I mean, can we not use the minimum of 10% without indexation and 20% with indexation for tax calculation?
    Thanks

    • Maharshi Shah says:

      Unlisted Equity Shares in a Company has a defined period of holding of 24 months. There was a change in the Budget 2019. The benefit of indexation is available in case of unlisted domestic shares and foreign shares (listed and unlisted).

  • Avinash Bahutule says:

    I had IDR shares of foregin bank listed in India. I bought by paying STT on BSE. Since these shares were delisted in India, the Bank sold the shares under ADR in London stock exchange and paid the proceeds. There is Net loss in this transactions for the LTCG. Since this is not reflecting as loss in my share broker’s statement as I have not sold through this broker in India, how to to show this transactions in ITR and can I adjust the loss with LTCG in india.

    • Anushka Shah says:

      Hey Avinash,
      You can report the Long Term Capital Loss on sale of foreign shares in Schedule CG of ITR-2 under the section B9 for sale of long term capital asset. Further, you can set-off the LTCL from sale of such shares with the LTCG from sale of any other asset. The remaining loss can be carried forward for 8 years and can be adjusted with future LTCG.

  • RG says:

    Can we offset the gain in foreign shares against the loss in indian stock markets? If yes, against which section.

  • Chetan says:

    If i hold unlisted stock in foreign company and didn’t sale that stocks in AY-2019-20 , So in that case should i be using ITR-2 or ITR-1 ?

    • Anushka Shah says:

      Hey Chetan,
      Since you have not sold the shares in AY 19-20, there is no capital gains income. So, you can file ITR-1.

  • Aditya Garg says:

    I have recieved ESOP from a foreign company and i need to sell those stock in FY 20-21. Please tell me what is the tax rate applicable in case i hold shares for more than 3 years.

    • Anushka Shah says:

      Hey Aditya,
      Income tax rate on sale of ESOPs of a foreign company held for more than 24 months is 20% with the benefit of indexation. You must report such income as Capital Gains and file ITR-2.

  • Suraj Gidwani says:

    I am a bit confused on the indexation of LISTED foreign shares.

    For LTCG the table in the article says
    20 % with indexation for foreign UNLISTED shares
    20 % without indexation for foreign LISTED shares

    However, Maharshi Shah vide his reply On
    26/08/2020 at 5:41 pm States that indexation is applicable to both listed as well as unlisted. These are contradicting statements, kindly clarify.

    Also, I had read somewhere that for the exchange rate ( of INR ) , one has to consider the exchange rate only at the date of transfer ( sale ) and not separately for purchase and sale. Please throw some clarifications on this as well.

    Thanks.

    • Quicko Support says:

      Hey Suraj,
      The tax rate on sale of foreign shares is 20% with Indexation whether listed or unlisted. We have updated the change in the article.
      The Exchange Rate is the telegraphic transfer buying rate as on specified date. Specified date for income from capital gains is the last day of the month immediately preceding the month in which the capital asset is transferred (sold). TT buying rate is the rate of exchange adopted by the State Bank of India as per RBI guidelines.

  • Rohit says:

    But we still need to show in foreign asset (Schedule-FA) section of ITR-2 even we don’t sell those stocks…. Am I right?

    • Anushka Shah says:

      Hey Rohit,
      Yes. Since it is a Foreign Asset i.e. asset located outside India, it should be reported in Schedule FA.

  • Suraj Gidwani says:

    Thanks Quickpro support for your reply to my query on 5/9/20 regarding exchange rate to be considered.

    However it’s still not clear that if only the selling rate ( transfer rate of asset ) is to be considered, How can I apply indexation to that ?

    Eg. I bought 1 share of apple in 2016 at $ 100
    Sold 1 share of Apple in 2020 at $ 150 on 7th May 2020

    My capital Gain is 150 -100 = $50

    Then multiply 50 by TT buying rate of USD on 30th April 2020 eg 70

    So my total gain is INR 3500

    How do I apply indexation to this?
    Kindly clarify.

    • Anushka Shah says:

      Hey Suraj,
      Indexation is applied to the Cost of Acquisition. You can calculate the Cost of Acquisition in INR and apply indexation using the formula – Cost of Acquisition * CII of Year of Sale / CII of Year of Purchase.

  • Deepak says:

    I am confused on what to enter under column 11 of table A3 of ITR2 (foreign assets), i have not sold my RSU’s, do i still need to fill ITR2? if yes, what to right under column11 of table A3?

    • Anushka Shah says:

      Hey Deepak,
      If you are holding foreign assets, you must file ITR-2. If you have not sold RSU’s, you need not report it in Schedule CG as capital gains income. However, since you are holding them, it must be reported as Foreign Assets. You can mention the amount of investment in the RSU’s as on 31st March.

  • Deepak says:

    Just to add, don’t have any dividend income.

  • Deepak says:

    Thanks Anushka! Since I did not paid anything for RSU can i keep 0 under column 11? Also, under column 8 (Inital value of investment), i have mentioned the value on vesting day. That should be fine right?

  • Suraj Gidwani says:

    Hi Anushka,

    If the rate of exchange is to be taken same for both cost of acquisition and sale consideration, which is what is suggested by Quick pro support vide their reply on 10/09/2020 at 5:48 pm ( and rule 115 of IT act ) As follows

    “The Exchange Rate is the telegraphic transfer buying rate as on specified date. Specified date for income from capital gains is the last day of the month immediately preceding the month in which the capital asset is transferred (sold)”

    This effectively means I am applying cost of indexation of INR To a foreign currency ?
    Is that correct ? Is that even allowed ?

    This is where my confusion lies.
    Please clarify.

  • Sandeep says:

    Hi,

    This is with respect to the query from Suraj Gidwani dated 05.09 and the reply to that dated 10.09.
    The FAQ still shows a question “How do I report income from sale of shares of Foreign Company in the Income Tax Return?” and the answer still shows 10% without indexation for listed foreign shares. Can you correct that as well please?

    Second: When you say listed or unlisted for foreign shares – does it mean listed here in India or in a recognized stock exchange in the foreign country where the trade happened?

    Thanks and Best Regards,
    Sandeep

    • Anushka Shah says:

      Hey Sandeep,
      ‘Listed’ here refers to the shares are listed on a recognized stock exchange in India.

Leave a Reply

Your email address will not be published. Required fields are marked *

Close Bitnami banner
Bitnami