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NRI CG Tax COMPUTATION

18 June 2021

Hi, Am an NRI who transferred $$ to my NRE a/c n later bought n sold some listed Indian co. shares in INR using NRO a/c,

for calculating stcg/ltcg, in my case will be thru Sec 48(first proviso) or U/S 115AD(1)(b)(ii)/(iii) or another?

Please let me know. Thanks!

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10 Replies

CA. Sourav Sarkar (Chartered Accountant ) (24578 Points)
Replied 18 June 2021

The tax liability on such a type of transaction is 20% after indexation. If the equity shares and equity-oriented mutual fund units are sold before 12 months of its acquisition, then the gain is classified as short term capital gain. Such short term capital gain will be taxable at 15%

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Ashwin Pitti (21 Points)
Replied 18 June 2021

Thanks for your reply.

My case is under Sec 48(first proviso), as I am utilizing the foreign currency I have remitted?

could you please quote the section under which my case presents?

Vasudevan C P (403 Points)
Replied 18 June 2021

Hi Ashwin,

If the non residents subscribed the shares bonds and Debentures of “Indian company” in ” Foreign Currencies”, then it is mandatory to them to apply 1st Proviso to Section 48.

The manner of computation of sales consideration, Cost of Acquisition and cost of improvements shall be dealt in accordance with Rule 115A.

I hope ur query is resolved

1 Like

Ashwin Pitti (21 Points)
Replied 18 June 2021

Hi Vasudevan!

Thanks a lot for solving my query!)

Also, could you please guide me on the Dividend Income treatment for an NRI for FY 20-21,

In ITR2, where to show the Dividend income under OS?

1(a)-->Gross income chargeable to tax at normal applicable rates

(or) under...

2 Income chargeable at special rates

2(d)i Dividends received by non-resident (not being company)
or foreign company chargeable u/s 115A(1)(a)(i)

anil jain (Partner) (1067 Points)
Replied 19 June 2021

As rightly pointed out by Mr Vasudevan that purchase of securities of Indian company through foreign currency attract the provisions of first proviso to sec 48.

since you mentioned that you purchased through NRO account and I am afraid that NRO account is at par with INR and not the foreign currency

therefore per my opinion, provisions of first proviso to sec 48 are not attracted.

Thanks

Ashwin Pitti (21 Points)
Replied 19 June 2021

Hi Anil Jain,

Both NRE n NRO are INR based a/c, The remitted $$ was converted to INR n credited to NRE in INR.

I think my case is under Sec 48(first proviso) as am utilizing the foreign currency I have remitted, pls correct me if am wrong.

Thanks.

anil jain (Partner) (1067 Points)
Replied 19 June 2021

you can remit to out side India from NRE without permission from RBI

but not from NRO. account.

Ashwin Pitti (21 Points)
Replied 19 June 2021

Sir, my query is related to the computation of CG for NRI who remitted foreign currency to India n bought n sold shares in India. The NRE a/c also is INR par.

Thanks.