Taxation of foreign investments

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Hi,

Client having investments in Foreign Shares (U.K.) handed down from grandfather. Investment was purchased before 1947. The shares were sold and payment of 11 lacs received through bank. I.Tax department wants to assess the income. What are the tax aspects of such sale in the hands of resident individual and in light of the existing  INDIA-UK DTAA, 1993.

Replies (3)

the whole gain will be taxable. but if it is a long term gain from share still it will be taxable as section 10(38) will not be applicable.

As per section 10(38) LTCG will be exempted from tax if the following conditions are fulfiled on transfer :

1) Equity shares of a company  or units of an equity oriented fund are sold through a recognized stock exchange on or after 01-10-2004, and

2) STT has been paid on such sale/transfer (it does not matter whether STT paid or not while purchased these shares or units).

Therefore my suggestion is for you to sold them through a recognized stock exchange and STT should be paid thereon to avail such exemption on capital gain

my dear friend share is quoted in foreign exchange so condition of stt paid will not be applicable.

whole long term gain will be taxable in india. indexation benefit is available for this transaction. gain will be chargeable @ 20%.

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