Income Tax on Foreign Shares

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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 Capital Gains from Investment in Stocks
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ITR for Capital Gains from Investment in Stocks
Take help of an expert to file Income Tax Return for Trading in Foreign Shares
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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.

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 10% without 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

FY 2019-20: Due Date to file Income Tax Return for both audit and non-audit cases has been extended to 30th November 2020
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FY 2019-20: Due Date to file Income Tax Return for both audit and non-audit cases has been extended to 30th November 2020
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.
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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.
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Carry Forward Loss for Sale of Foreign Shares

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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 – 10% 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

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