• Capital gain for US stock investment

I am a Indian citizen and i am planning to trade US stocks using a International broker. What will be the taxes for short term and long term gains i make by trading in US stocks. Please advise.
Asked 4 months ago in Capital Gains Tax

Hello,

That income will be subject to tax in USA meaning thereby you need to pay tax locally there in USA and than based upon Indian Law said income will be added in indian income and credit of tax paid in terms of withholding tax will be available in india

Vishrut Rajesh Shah
CA, Ahmedabad
744 Answers
18 Consultations

5.0 on 5.0

If you hold shares for less than 3 years it will be short term and more than that would be long term.

Tax on short term would be as per your slab rate and for long term it would be 20%.

 

Hope you find the information helpful if you do please rate it 5 and provide your valuable feedback for my improvement.

Thank you.

Naman Maloo
CA, Jaipur
3355 Answers
33 Consultations

5.0 on 5.0

Hi,

 

it all depends upon the nature, frequency and intention of trade. It the intention is to make business profit and frequency of the transactions are quite high, it can ne treated as business income and will be taxed as per slab rate.

 

However if the intention and frequency suggest that the idea is to make investment and grow your investment, then it will be short term/ long term capital gain tax.

 

Long term capital gain will be taxed @20% and short term will be taxed as per your slab.

Lakshita Bhandari
CA, Mumbai
4878 Answers
316 Consultations

5.0 on 5.0

- If it is an investment in equity with delivery option then it would be capital asset. If you are planning to do trade in derivatives then it would be a business income. Income tax paid in USA will be eligible for DTAA relief in India.

Vivek Kumar Arora
CA, Delhi
3667 Answers
220 Consultations

5.0 on 5.0

Hello,

 

Taxation in India would depend upon the nature and frequency of your transactions. If done with the intention of investment with lesser frequency, Capital Gain would be applicable. Otherwise, if done on a more frequent basis as trading, then it would be termed as your business income.

Taxes paid in the US on such income would be available as a tax credit while paying Indian Income Tax.

I hope that this answer satisfies your requirements. 

 

Regards,

CA Hunny Badlani

Hunny Badlani
CA, Madhya Pradesh
2219 Answers
7 Consultations

5.0 on 5.0

Dear Sir,

 

Hope you are doing well !!

 

Trading in US stock must be reported as a business unless you have only a few trades (say if only 2-3 trades) in the financial year.

 

As per the tax laws of India, sections 90 and 91 of the Income-tax Act deal with the concept of FTC. Section 90 discusses claiming of FTC in a case where India has entered into a Double Taxation Avoidance Agreement (DTAA) with another country.

 

Under these sections, if the taxpayer is a resident of India, and he has paid taxes outside India, he can claim a credit of such foreign taxes paid against his tax payable in India.

 

In accordance with Rule 128, in order to claim FTC, the taxpayer is required to file following documents on or before due date of filing of return:

  1. A statement of :

  • foreign income offered to tax
  • foreign tax deducted or paid on such income in Form No. 67

  1. Certificate or statement specifying the nature of income and the amount of tax deducted therefrom or paid by the taxpayer :

  • From the tax authority of the foreign country
  • from the person responsible for the deduction of such tax
  • signed by the taxpayer

  1. Proof of payment of taxes outside India



We may assist you in entire procedure.

Payal Chhajed
CA, Mumbai
4488 Answers
77 Consultations

5.0 on 5.0

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