Taxability of foreign shares held by resident indian

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Abhishek Jain (Querist)
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04 June 2019 Hello All,

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.

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)
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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.

Abhishek Jain

Abhishek Jain (Querist)
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13 June 2019 Hello Sir,

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) ?

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)
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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).

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