Can anyone help me with taxability when a resident Indian individual invests in foreign shares, securities, fixed deposits.
For example Mr A has a bank account in USA. He has now purchased share of a foreign company (ABC Inc) for $ 1000. Exchange rate prevailing that time was 1$ = INR 65
Now after a period of time, Mr A sold shares of ABC Inc for $ 1050. Exchange rate is 1$ = INR 70
Question here is, while computing income from capital gains, gains of Mr A will be $ 50 ($ 1050 - $ 1000) * exchange rate on date of sale 70 = INR 3,500 (A)
OR
Will it be $ 1050 * 70 = INR 73,500 sale consideration $ 1000 * 65 = INR 65,000 cost of acquisition gain difference of above INR 8,500 (B)
Answer will be (A) or (B). Do let me know your views.
05 June 2019
As he purchased share from his foreign bank account, while computing income from capital gains, gains of Mr A will be $ 50 ($ 1050 - $ 1000) * exchange rate on date of sale 70 = INR 3,500.
At the very outset, I would like to thank you for your response.
I would like to reiterate the fact that Mr A is a resident Indian and purchased shares of a foreign company. The basis of your answer, is it related to proviso to section 48(1) ?
14 June 2019
That 48(1) related to non resident. Here the investment is in foreign currency so I replied that way. I am revising my reply as Mr A is resident. It will be $ 1050 * 70 = INR 73,500 sale consideration $ 1000 * 65 = INR 65,000 cost of acquisition gain difference of above INR 8,500 (B).
CAclubindia
