Stocks and property investments abroad? Restrictions and tax rules are explained | Jobs Vox

Dr. Suresh Surana, Founder, RSM India said, “As per the Foreign Exchange Management (Foreign Investment) Rules, 2022, a resident individual can invest in foreign shares and immovable property outside India up to a financial limit of LRS of USD 250,000. year. Regarding the tax implications of shares and properties held abroad, any gains made by Indian investors on foreign shares and/or immovable properties are subject to capital gains tax depending on the holding period of the shares. If such shares/assets are held for more than 24 months, the gain will be classified as long term capital gain and will be taxed @ 20% u/s 112 of the IT Act. On the other hand, gains from foreign stocks held for up to 24 months are classified as short-term capital gains and taxed at the marginal slab rate applicable to the individual investor. Foreign tax credit (unilateral or bilateral India has a treaty with a foreign country. Form 67) if such investor is taxable on such benefits in India and in the foreign jurisdiction.

“Furthermore, Section 206C(1G) of the IT Act mandates that any authorized dealer bank must levy and collect 5% tax on an Indian investor’s foreign investment under LRS. 7 million in a particular financial year. If the Indian investor does not have PAN or Aadhar, such TCS will be taxed at 10%. It collects at a higher rate.Though such TCS can be claimed as a credit by an Indian investor while filing his income tax return in India, the investor should consider the TCS amount to plan the remittance, says Dr. Suresh Surana.

Another aspect that Indian residents should consider and should not miss is foreign assets (shares/securities, immovable property, etc.) when filing their tax returns in India in ITR schedule FA. Non-disclosure of such foreign assets under the “Black Money (Undisclosed Foreign Income and Assets) and Non-Declaration of Taxes Act, 2015 will result in a penalty of Rs. 10,000,” added Dr. Suresh Surana.

Nisha Harchekar, Head – Equity Research at Finto said, “In order to expand the portfolio in the global market, it is important to understand the restrictions and taxes applicable to Indian residents. Limit: In a financial year, Indians can invest up to $2,50,000 abroad in real estate or securities under the Liberalized Remittance Scheme (LRS). On the tax front, equities and real estate attract long-term capital gains (LTCG) if held for more than 24 months with indexation gains of over 20%. If held for less than 24 months, it attracts Short Term Capital Gain (STCG) as a flat rate.

“In case of debt instruments and mutual funds, LTCG attracts about 20% tax along with indexation benefits if held for more than 36 months. If held for less than 36 months, it attracts short-term capital gains (STCG) as per flat rate. Income and rental income, taxation as per flat rate It will, no waiting period will apply,” said Nisha Harchekar.

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