Hi,
We discussed this over call. With respect to the additional point relating to threshold for US ETF for calculating capital gain, I would like to clarify that, threshold for US ETF is 36 months as opposed to 24 months im case of US shares.
International Investing - Taxation on CG, Dividends and Interest income
Hello, - What would be the general rules to keep in mind (wrt tax) when it comes to investing in US stocks (via platforms like Vested)? - Will US ETFs have a different threshold period than US stocks for the purposes of LT calculation? - What all forms and schedules do we need to file (in addition to inclusion in the ITR) : 1) Disclosing the foreign investments 2) CG 3) Claiming credit on tax withheld on dividends 4) Dividend and interest income - What rate will be used for converting the USD gains and value to INR? - Which ITR will be used? - Does US CG and Dividends/Interest complicate the process and increases the chance of scrutiny?
Asked 4 years ago in Capital Gains Tax
Assuming your residential status is Resident.
- In case of US stocks, holding period for calculation of LTCG would be more than 24 months otherwise STCG. For LTCG, tax will be @20% with indexation benefits and for short term @ normal slab rates.
- For international ETF, it is 36 months for LTCG and STCG if less than 36 months. Tax treatment is same as above on capital gain.
- If WHT deducted outside India then you will be required to file Form 67 before filing of ITR. File ITR-2 and disclose the transaction in schedule CG, schedule FSI, Schedule TR, Schedule FA etc.
- For capital gain income, exchange rate will used on the date of sale.
- Dividend and interest income will be taxable at slab rate. Any WHT deducted can be claimed as tax credit.
- WHT credit will be available proportion to tax liability in India on foreign income.
- If everything will be disclosed as per law then there are no chances of scrutiny.
Dear Sir,
Hope you are doing well !!
Please find below the responses:
-If you have held the stocks for more than 24 months before selling them and earning capital gains, then you will be liable to pay a capital gains tax at the rate of 20% plus all applicable fees and surcharges.
On the other hand, if you have held stocks for less than 24 months before selling them and earning capital gains, then the said gains will be added to your taxable income and taxed as per the income-tax slab applicable to you.
-When you invest in a stock in the US, you might receive a dividend from the company. This amount is taxable at the rate of flat 25%. Hence, if the company declares a dividend of $100, then you will receive $75. This is lower than the standard tax rate for foreign investors in the US due to the tax treaty between India and the USA.
-You need to file ITR 2 for the above income and form 67 for foregin tax credit.
-For capital gain purpose, you need to use the exchange rate as on date of sales.
-Changes of scrutiny depends on various factors. We need to discuss the same over call.
We may assist you in CG calculations, ITR filings/form 67 filings, & entire procedure.
It is advisable to take a phone consultation for detailed discussion.
Ask a Chartered Accountant
Get tax answers from top-rated CAs in 1 hour. It's quick, easy, and anonymous!
Ask a CA