Taxation of capital gain of foreign shares

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narender (Querist)
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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

Rupesh Jain

Rupesh Jain (Expert)
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26 July 2013 he is take income and also tax paid in US as tax paid under double avoidance tax agreement

narender

narender (Querist)
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26 July 2013 Didn't get u sir

narender

narender (Querist)
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31 July 2013 Dear Experts Kindly Suggest

Aashok Kumar Sharma

Aashok Kumar Sharma (Expert)
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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**.

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### ✅ 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.

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### ✅ 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).

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### 🔢 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

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### ✅ 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 |

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Let me know if you want help calculating the tax or filing Form 67 — I can guide you step-by-step.

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