Taxation of capital gain of foreign shares
This query is : Resolved
26 July 2013
Dear All
an Indian Ordinary Citizen (Who was was earlier a US Citizen ) has sold his US investment in US and paid the Capital Gain tax in US
Since now he is a Ordinary Indian Citizen , will the said capital gain is again taxable in India??
Please suggest
an Indian Ordinary Citizen (Who was was earlier a US Citizen ) has sold his US investment in US and paid the Capital Gain tax in US
Since now he is a Ordinary Indian Citizen , will the said capital gain is again taxable in India??
Please suggest
26 July 2013
he is take income and also tax paid in US as tax paid under double avoidance tax agreement
26 July 2025
Yes, **capital gains on sale of foreign shares** by a **resident and ordinarily resident (ROR)** in India **are taxable in India**, **even if tax has already been paid abroad**.
---
### ✅ Here's the position under Indian Tax Laws:
#### 1. **Residential Status is Key**
You mentioned the person is an **"Ordinary Indian Citizen"** — which under the Income Tax Act, means he is **Resident and Ordinarily Resident (ROR)** in India.
* A **ROR is taxed on their global income** in India.
* So, any **capital gain from foreign shares** (including U.S. shares) is **taxable in India**, even though the asset is located abroad.
---
### ✅ 2. **Relief via DTAA (Double Taxation Avoidance Agreement)**
India and the U.S. have a DTAA. Under this:
* **Capital gains may be taxed in the U.S.** (as per U.S. laws),
* But **India also has the right to tax**, since the taxpayer is resident in India.
✅ **However, you can claim tax credit** in India for the **tax paid in the U.S.** under **Section 90** or **Section 91** of the Income Tax Act.
> 🧾 You must file **Form 67** online **before filing your ITR** to claim the Foreign Tax Credit (FTC).
---
### 🔢 Example:
* Sale proceeds in U.S.: \$100,000
* Capital gain: \$20,000
* U.S. tax paid: \$4,000
* In India, capital gain of \$20,000 (converted to INR) is taxable
* Say Indian tax liability on this is ₹6,00,000
* You can claim ₹4,000 (converted) as **credit**, pay the balance
---
### ✅ Summary:
| Item | Taxable in India? | Notes |
| ----------------------------- | ----------------- | --------------------------------------------- |
| Capital gain from U.S. shares | ✅ Yes | Because taxpayer is ROR in India |
| Relief for U.S. tax paid | ✅ Yes | Through DTAA – claim Foreign Tax Credit (FTC) |
| Form to be filed | 📝 Form 67 | Must be submitted **before ITR** to claim FTC |
---
Let me know if you want help calculating the tax or filing Form 67 — I can guide you step-by-step.
---
### ✅ Here's the position under Indian Tax Laws:
#### 1. **Residential Status is Key**
You mentioned the person is an **"Ordinary Indian Citizen"** — which under the Income Tax Act, means he is **Resident and Ordinarily Resident (ROR)** in India.
* A **ROR is taxed on their global income** in India.
* So, any **capital gain from foreign shares** (including U.S. shares) is **taxable in India**, even though the asset is located abroad.
---
### ✅ 2. **Relief via DTAA (Double Taxation Avoidance Agreement)**
India and the U.S. have a DTAA. Under this:
* **Capital gains may be taxed in the U.S.** (as per U.S. laws),
* But **India also has the right to tax**, since the taxpayer is resident in India.
✅ **However, you can claim tax credit** in India for the **tax paid in the U.S.** under **Section 90** or **Section 91** of the Income Tax Act.
> 🧾 You must file **Form 67** online **before filing your ITR** to claim the Foreign Tax Credit (FTC).
---
### 🔢 Example:
* Sale proceeds in U.S.: \$100,000
* Capital gain: \$20,000
* U.S. tax paid: \$4,000
* In India, capital gain of \$20,000 (converted to INR) is taxable
* Say Indian tax liability on this is ₹6,00,000
* You can claim ₹4,000 (converted) as **credit**, pay the balance
---
### ✅ Summary:
| Item | Taxable in India? | Notes |
| ----------------------------- | ----------------- | --------------------------------------------- |
| Capital gain from U.S. shares | ✅ Yes | Because taxpayer is ROR in India |
| Relief for U.S. tax paid | ✅ Yes | Through DTAA – claim Foreign Tax Credit (FTC) |
| Form to be filed | 📝 Form 67 | Must be submitted **before ITR** to claim FTC |
---
Let me know if you want help calculating the tax or filing Form 67 — I can guide you step-by-step.
You need to be the querist or approved CAclub expert to take part in this query .
Click here to login now
Click here to login now
Similar Resolved Queries
Unanswered Queries
- Section 54F - Exemption on LTCG in 2026 for HP purchased in 2023
- STCG....................................................
- TAN for Partnership
- Sales return eway bill
- Treatment of Pension ?annuity returns on PMVY
- AMOUNT RECEIVED UNDER COMPULOSRY ACQUISITION OF AGRICULTURAL LAND
- AY 26-27 ITR-4 FILING U/S 44-ADA
- Plot of land. Cost of Acquisition
- REGARDING GST LIABILITY/....
- LTCG for Assmt year 26-27
- Gst invoice numbering and delivery challan numbering
- Standard Deduction claim for EPFO Pension and ICICI Prudential Life Annuity
- Small dealers gst returns filing
- Sales amount in Gstr1
- CG after sale of flat
- E Commerce GSTR1 & 3B how to file
- GST Cancellation without jurisdiction
- Legal Opinion on Registrar's Refusal to Investigate a Society for Non-Renewal and Non-Compliance
- GST Refund_RFD-01
- Form10BD was uploaded successfully without any Error but after 24 hours, Form10BE are not available
Trending Online Classes
-
DT & Audit (Exam Oriented Fastrack Batch) - For May 26 Exams and onwards Full English
CA Bhanwar Borana & CA Shubham Keswani
Subscribe to Pro
Join an elite circle of professionals
CAclubindia
