Taxation of capital gain of foreign shares

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narender (Querist)

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)

26 July 2013 he is take income and also tax paid in US as tax paid under double avoidance tax agreement

narender

narender (Querist)

26 July 2013 Didn't get u sir

narender

narender (Querist)

31 July 2013 Dear Experts Kindly Suggest

Aashok Kumar Sharma online

Aashok Kumar Sharma

(Expert)

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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