Tax on share
lina abood
(Querist) 26 January 2012
This query is : Resolved
DEAR EXPERTS,
NRI HAS BOUGHT SHARE IN INDIA WHEN HIS STATUS WAS ORDNERY RESIDENT (LONG TERM INVESTMENT),NOW HE HAS DECIDED TO SELL THIS SHARE,SO THE INQUIRY ARE:
1- DOSE HE HAS TO PAY TAX ON THE GAIN TO INDIAN GOVERMENT?HOW MUCH?
2-CAN HE DEPOSIT THE ENTIRE AMOUNT IN HIS NRI ACCOUNT?
3-CAN HE TRANSFER THAT MONEY TO ANOTHER COUNTRY WERE HE IS WORKING NOW (USA)?
4-IN CASE HE CAN TRANFER THE MONEY TO USA IS THIS MONEY GOING TO BE UNDER TAX BY USA GOVERMENT
WAITING FOR YOUR REPLY
THANK YOU ALL
Sailesh Kumar Shah
(Expert) 26 January 2012
1.He have to pay Short term capital gain, if sale of shares within 1 year from the date of purchase and after one year he have to pay long term capital gain.
2.yes
3.yes
4.No
lina abood
(Querist) 26 January 2012
DEAR SIR,
ONE THING I JUST WANT TO CONFIRM IT WITH YOU,THAT THE SHARE HE HAS BOUGHT FROM HIS ORDENARY SAVING ACCOUNT AND NOT HIS NRI ACCOUNT ,ONCE HE SELL IT CAN HE DEPOSITE THE MONEY IN NRI ACCOUNT?
PLEASE CONFIRM THAT
THANK YOU
Raj Kumar Makkad
(Expert) 26 January 2012
I endorse the advice of shroff and Shah.
lina abood
(Querist) 26 January 2012
THANK YOU ALL
Vineet
(Expert) 27 January 2012
Sorry Experts!! Answer is not that simple.
First of all, NRI does not mean you are not taxable in India. Your income arising from sources in INdia are still taxable. But your current country of residence is important. For example, if you are resident of Mauritius, the income arising from transfer of shares of Indian companies is not taxable in India. As you stated, you are currently resident of USA, the capital gains are taxable in India under tax treaty with USA.
However, you stated that the investment is in shares and I presume considering your query that shares are of listed companies and you invested in them atleast more than one year ago. So if you sell these shares on stock exchange, there is no capital gains tax on the same.
Coming to second query, you CANNOT deposit the sale proceeds in your NRE account. the same has to be credited to your earstwhile saving account which should have been designated as NRO account by now.
You can transfer money from your NRO account to your current country of residence subject to RBI guidelines.
Please note that if you are tax resident of USA (which you are), your global income is taxable in USA. So even if you don't pay tax in India, you may still liable to pay tax in USA on this share transaction (irrespective of the fact whether you remit this money to USA or not). Please consult a local tax advisor on the issue.
prabhakar singh
(Expert) 28 January 2012
Expert : Vineet seems right in his answer.
