capital gain nri
TRANSCRIPT
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Introduction :
Non-resident persons have been given a special status under the incometax
law. Besides the general provisions for computation of long-term capital
gains and the tax liability thereon, contained in section 48 and section
112,Chapter XII-A (comprising of sections 115C to 115-I) contains specialprovisions relating to certain incomes of non-resident Indians (NRIs) contains
special provisions relating to certain incomes of non-resident Indians (NRIs).
Section 115AC makes provision for tax on income from bonds or shares
purchased in foreign currency or capital gains arising from their transfer'.
Besides, the provisions of Section 115A have been extended to non-residents,
besides foreign companies, regarding tax on dividends, interest on foreign
currency debts and income from units of mutual fund. In this Chapter we
shall discuss the various provisions relating to tax on capital gains arising tonon-resident.
Non-Residents:
Under the Income-Tax Act, a person is non-resident in India in any previous
year, if he satisfies any of the following conditions:
(a) If he was in India for less than 365 during the four preceding years and
for less than 182 days during the previous year; or
(b) if he was in India for 365 days or more during the four preceding years
and for less han 60 days during the previous year.
Note :
The period of 60 days referred to in condition (b) above, shall be substituted
by 182 days, in case of an Indian citizen who leaves India in any previous
year as a member of crew of an Indian ship or for the purpose of employmentoutside India, and in case of an Indian citizen or a person of Indian origin who
is outside India and who comes on a visit to India in any previous year.
The residential status of a person is to be determined for every previous year.
A person may be resident in a previous year and non-resident in the following
year, or vice versa.
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Non-Resident Indian (NRI)
An individual who is a citizen of India or a person of Indian origin, and a 'non-resident' (according to the above definition), is called a 'non-resident Indian
(NRI)
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Incidence of tax in case of Non-Resident Person:
Non-residents (including NRI's) are liable to tax only in respect of income
which is received or is deemed to be received in India or accrues or arises or
is deemed to accrue or arise in India during the previous year.
Thus, any income received / accrued outside India will not be taxable in India
in respect of non-residents.
Remittance or Transmission of Money to India is not an Income Received in
India
It is significant to note that income received in first instance outside India and
subsequently remitted or otherwise transferred to India is not to be treated
as 'income received in India'.
Income-tax Liability of a Non-resident
A non-resident Indian having (Indian) income of more than Rs. 50,000, except
income from certain specified assets, is liable to pay income-tax at the same
rates as are applicable in case of resident assessees.
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Any income from 'long-term capital gains' arising to a non-resident is taxable
at the rate of 20%.
The balance of total income (other than long-term capital gains) is taxable at
the normal rates of income-tax for various categories of assessees. See
annexure 16.1
Computation of Capital Gains arising to Non-residents:
In the present scheme of the Income-tax Act, three sets of provisions exist for
computation and taxation of capital gains (and certain other incomes too)
arising to non-residents. These are-
(i) General Provisions (Sections 48 and 112) wherein the procedure for
computation of capital gains on transfer of shares/debentures is different
from that on other assets
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(ii) special Rate of Tax on Income and Capital gains from Euro Issues/ GDRs.
(Sec. 115A and 115AC).
(iii) Special Provisions for Taxation of NRIs having income from-tax Act.)
We Shall now discuss each of these provisions (insofar as they relate to
capital gains).
(i) General Provisions (Sections 48 and 122)
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Computation of Capital Gains on transfer of Shares/Debentures
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Capital gains arising from the transfer of a capital asset being shares in, or
debentures of, an Indian company shall be computed by converting the cost
of acquisition, expenditure incurred wholly and wholly and exclusively in
connection with such transfer and the full value of the consideration received
or accruing as a result of the transfer of the shares or debentures, into the
same foreign currency as was initially utilised in the purchase of the shares or
debentures, into the same foreign currency as was initially utilised in the
purchase of the shares debentures, and the capital gains so computed insuch foreign currency shall be reconverted into Indian currency. Moreover,
the aforesaid manner of computation of capital gains shall be applicable in
respect of capital gains accruing or arising from every re-investment
thereafter in (and sale of ), shares in or debentures of, an Indian company.
[Sec. 48, First Provision
This provision intends to protect non-residents from fluctuation of rupeevalue against foreign currency, in order that he pays tax only on the actual
capital gains in foreign currency and not on the gains computed in rupees.
However, in such cases the benefit of indexation will not be available for the
cost of acquisition.
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The provision has been extended w.e.f. A.Y. 1993-94 to all non-resident
assessees. (Upto A.Y. 1992-93, this benefit was available to non-resident
Indians only).
For the purposes of this provision 'foreign currency' and 'Indian currency'
shall have the same meanings as assigned to them under the FERA. Thus,
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'foreign currency' means any currency other than Indian currency and 'Indian
currency' means currency which is expressed or drawn in Indian rupees but
does not include special bank notes and special one rupee notes issued under
section 28A of the Reserve Bank of India Act, 1934.
The conversion of Indian currency into foreign currency :
The conversion of Indian currency into foreign currency and the reconversion
of foreign currency into Indian currency shall be at the rates of exchange
prescribed in this behalf by the CBDT, viz. -
(a) the cost of acquisition of the capital asset shall be converted at theaverage of the telegraphic transfer (T.T.) buying rate and T.T. selling rate of
the foreign currency initially utilised in the purchase of the said asset as on
the date of its acquisition.
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(b) the transfer expenses and the full value of consideration shall be
converted at average of the T.T.buying rate and T.T. selling rate of theforeign currency initially utilised in the purchase of the said asset, as on the
date of transfer of the capital asset.
(c)capital gains computed in the foreign currency, shall be converted into
rupees, at the T.T. buying rate of such foreign currency, as on the date of
transfer.
Computation of Capital Gains on transfer of other Capital Assets
Capital gains arising from the transfer of capital assets other than shares in,
or debentures of, an Indian company, shall be computed in the usual manner,
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by deducting cost of improvement and expenditure incurred in relation to
such transfer from the total sale consideration. However, for computing
capital gains on transfer of 'long-term capital assets'. 'Indexed Cost
Acquisition' and 'Indexed Cost of Improvement' shall be considered.
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Rates of Taxes on Capital Gains:
FOR LONG-TERM CAPITAL GAINS
Income arising from 'Short-term Capital Gains' is included in the gross total
income of the gross total income of the assessee and after allowing
deductions under Chapter VI-A, the total income is subject to tax at the
normal rates in force for that assessment year. (See Annexure16.1). Rebate
under Section 88 is available from the tax computed on the total income in
respect of deposits/payments made in the approved schemes and
instruments.
FOR LONG-TERM CAPITAL GAINS
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As per section 112 long-term capital gains are subject to a flat rate of
income-tax @20%.
However, in case of long-term capital gains arising on transfer of listed
securities (except shares and debentures) or units of UTI or mutual funds, the
amount of tax shall be restricted to 10% of the capital gain computed without
giving the benefit of indexation.
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Deductions under Chapter VI-A and rebate under Section 88 will not be
available in respect of long-term capital gains and the tax payable thereon.
Income other than long-term capital gains will be subject to tax at the normal
rates in force.
In the case of an individual or a Hindu undivided family the basic exemption
limit of Rs. 50,000 shall first be allowed against total income as shall be
allowed against such long-term capital gains. For details refer chapter
'Computation of Capital Gains and Tax liability'.
For examples on computation of capital gains refer para 'Computation long-
Term Capital Gains Relating to a Foreign Exchange Asset in the Non-residentIndians (NRIs).
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(ii) Special Rate of Tax on Income and Capital Gains from Euro Issues/GDRs
[Secs. 115A and 115AC ]
With a view to increasing the inflow of foreign exchange into India, the
Government has permitted issue of convertible bonds and equity shares
abroad, by established Indian companies. The bonds/shares shall be
denominated in foreign currency and shall be subject to a special treatment
under the Income-tax Act.Besides, non-residents have now been placed at
par with foreign companies, in respect of taxation of dividends, interest on
foreign currency debts and income from units of notified mutual funds.
The special provisions are applicable to all non-residents in respect of their
income by way of :
(a) dividends [which have not been subjected to additional incometax in the
hands of company u/s 115-O] [other than those mentioned in clause (d)
below];
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(b) interest received from Government or an Indian concern on foreign
currency debts;
(c) income received in respect of units, purchased in foreign currency, of a
mutual fund notified u/s 10(23D) or of the Unit Trust of India
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(d) interest or dividends [which have not been subjected to additional
Income-tax in the hands of company u/s 115-O] in respect of specified bonds
or shares (see below) or inrespect of bonds or shares of a public sector
company sold by the Govt. to the non-residents in foreign currency; or
(e) long-term capital gains arising on transfer of the bonds/shares aforesaid.
Specified bonds or shares :
The provision shall apply to the bonds or shares issued by an Indian company
in accordance with the specified scheme [i.e. Foreign Currency Convertible
Bonds and Ordinary Shares (through Depository Receipt Mechanism)
Scheme, 1993] of the Central Government and purchased by a non-resident
assessee in foreign currency. These are popularly known as Euro
Issues/GDRs.
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This provision is also applicable in case of shares or bonds in an
amalgamated or resulting company, acquired in accordance with the above
scheme. [Sec. 115AC}
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Transfer of bonds or shares to another non-resident :
A transfer of the specified bonds or shares, made outside India to another
non-resident, shall not be regarded as a transfer [vide section 47 (viia)].
Thus. no tax shall be payable on capital gains arising from such transfer.
No deductions to be allowed :
While computing the aforesaid incomes (whether by way of interest or
dividends or long-term capital gains), the following points must be considered
:
(1) In computing the interest or dividend income no deduction in respect of
any expenditure shall be allowed under sections 28 to 44C or under section
57 of the Act;
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(2) In computing the long-term capital gains, the protection against
exchange rate fluctuation and against inflation available under the first and
second provisos to section 48, shall not be allowed;
(3) No deduction under Chapter VI-A shall be allowed where the gross total
income consists only of the incomes as aforesaid. In other cases, the
deduction under Chapter VI-A shall be allowed from the gross total income as
reduced by such incomes, as if such reduced amount was the gross total
income as reduced by such incomes, as if such reduced amount was the
gross total income of the assessee.
(4) The unabsorbed capital losses brought forward from earlier years shall
be allowed to be set off against ' long-term capital gains' from specified
bonds/shares.
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Tax Payable :
In case of a non-resident, the income-tax payable shall be the aggregate of-
(i) 20% of the income specified in clauses (a), (b) and (c) above;
(ii) 10% of the interest or dividend income in respect of specified bonds orshares mentioned in clause (d) above
(iii) 10% of the long-term capital gains arising from the transfer of the
afordable shares mentioned in clause (e) above; and
(iv) income-tax chargeable on the total income as reduced by the amount of
incomes referred to in clauses (a) to (e) above, at the normal rates.
Return of Income :
A non-resident is not required to furnish his return income u/s 139 (1) if-
(a) his total income for the previous year consists only of incomes specified in
clauses(a) to (e) above;and
(b) the tax has been deducted at source on such income in accordance with
the relevant provisions. [Sec. 115A(5) and 115AC(4)]
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Sections 115A and 115AC are Mandaroty for Non-residents (Other than
NRI's)]
The provisions of sections 115A and 115AC (for taxation of dividends, interest
on foreign currency debts, income received in respect of units of a mutual
fund, income from bonds or shares purchased in foreign currency or capital
gains arising from their transfer) are mandatory for non-residents (other than
non-resident Indians). Non-resident Indians, however, have an option of
being assessed either under the special provisions of Chapter XII-A or under
the provisions of sections 115A and 115AC. In their case, the provisions of
sections 48 and 112 shall apply only where sections 115A and/or 115AC are
not applicable and option to be assessed under Chapter XII-A is not
exercised.
(iii) Special Provisions for Taxation of NRIs having Income from Foreign
Exchange Assets (Chapter XII-A of Income -tax Act)
Applicability
The special provisions of taxation contained in Chapter XII-A are applicable to
a non-resident Indian' who is an individual, being a citizen of India or a personof Indian origin, not resident in India, having 'investment income' or 'long-
term capital gains' or both from a 'foreign exchange asset' [Sec. 115C(e)]
'Investment Income' means income derived from a foreign exchange asset
[but excludes dividends subjected to additional income-tax in the hands of
the company u/s 115-O.] 'Capital gains' means a capital gain from long-term
foreign exchange asset. 'Foreign exchange asset' means any specified asset
acquired or purchased with or subscribed to in 'convertible foreign exchange'
(as defined under FERA, 1973). the specified assets are: (i) shares in an
Indian company. (ii) debentures issued bay public limited Indian company.
(iii) deposits with a public limited Indian company, (iv) securities of the
Central Government, and (v) any other assets which the Central Government
may notify in the Official Gazette in this behalf (NSC VI and VII issues had
been notified under this provision; both of these issues have since been
discontinued).
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Income on shares in Indian companies, allotted in consideration for the
machinery and plant delivered abroad, will attract liability to tax w.e.f.
1.5.1984.
This method is evidently intended to benefit the NRIs. In order that the
benefit may be availed of. the investor has to be a non-resident Indian. as
defined under the Income-tax Act. 1961 and not under the FERA. 1973.
Deductions Not Allowable:
(a) In computing the investment income (i.e. interest or dividend income
derived from a foreign exchange asset), no deduction in respect of any
expenditure or allowance shall be allowed under any provisions of this Act.
(b) In computing the long-term capital gains (arising on transfer of a foreign
exchange asset) the benefit of 'indexation' available under second proviso
to section 48 shall not be available on such long-term capital gains.
However, in case of shares/debentures of an Indian company the protection
against exchange rate fluctuation (contemplated vide section 48 first proviso)
shall continue to be available. For 'computation of capital gains on transfer of
shares/debentures' refer to 'General Provisions (sections 48 and 112)' above
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(c) Where the gross total income consists only of investment income orlong-term capital gains (in respect of foreign exchange assets) or both, no
deduction under Chapter VI-A shall be allowed. In other cases, the gross total
income shall be reduced by such incomes and the deductions under Chapter
VI-A shall be allowed against the gross total income so reduced [Sec. 115D]
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Exemption from Capital Gains:
No capital gain tax is attracted on long-term capital gains arising from
transfer of foreign exchange asset if the net consideration for the transfer is
invested within six months in any specified asset or deposited in notified
savings certificates. If investment in aforesaid specified assets is less than
the net consideration, the exemption will be allowed on proportionate basis.
In case where the new (specified) asset is transferred or converted into
money within a period of three years from the date of its acquisition, the
amount of capital gain exempted earlier will be regarded as long-term capital
gains of the year in which the new asset is transferred o converted into
money.
The 'new assets' in which the net consideration should be invested, are
specified below : (vide Section 115E)
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-Shares in an Indian company
- Debentures issued by an Indian company which is not a private company
- Deposits with an Indian company which is not a private company.
- Any security issued by the Central Government.
- Any savings certificates notified by the Central Government. [The national
Savings Certificates (VI and VII Issues) have been notified for this purpose
vide Notification No. SO 653(E), dated 8.9.1982 but the same have been
discontinued].
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- Any other asset that the Central Government may notify for this purpose
[No such asset has been notified so far ].
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Prior to 1.4.1989, deposit in the Non-resident (External) Account was also
included as one of the 'new assets',but this has since been withdrawn. From
the assessment year 1989-90 onwards, deposit of consideration in this
Account will not entitle the assessee to the exemption.
The expression 'net consideration' means the full value of the consideration
received or accruing as a result of the transfer, as reduced by anyexpenditure incurred wholly and exclusively in connection with such transfer.
No other deduction will be allowed in determining the net consideration.
Since the transferred asset is a movable asset [shares or debentures], the
only conceivable expenditure that can be deducted will be brokerage or
commission paid, or stamp duty paid for the transfer.
Quantum of Exemption
Where the entire net consideration is reinvested in a new asset, the entire
capital gain is exempt from tax. Where only a portion of the net
consideration is reinvested. then the exemption from tax is allowed on
proportionate basis.
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Arithmetically speaking.
Amount of Cost of new 'specified asset' x Capital Gain
Exemption =-----------------------------------------------------
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Net consideration for transfer of 'foreign exchange asset'.
Simultaneous Exemption u/s 54E
For transfers of foreign exchange assets effected before 1.4.1992,
simultaneous exemption u/s 54E (along with exemption u/s 115F) would be
available provided the conditions laid down in the respective provisions were
satisfied.
From A.Y. 1993-94, however, exemption u/s 54E is not available.
Rate of Tax
The investment income and long-term capital gains from [capital assets other
than foreign exchange assets are chargeable to tax at flat rate of 20%.
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W.e.f. A.Y. 1998-99 income by way of long-term capital gains from foreignexchange assets are chargeable to tax at the rate of 10%. For A.Y. 1997-98.
the rate of tax was 20%.
Option not to be assessed under this special provision
Income from foreign exchange assets and long-term capital gains arising
from such specified assets, would be treated as a separate block and charged
at the rates mentioned above. The other incomes of non-resident in India will
be treated as separate block and charged to tax in accordance with the other
provisions of the Income-tax Act. The non-resident has option to be assessed
or not to be assessed under special provision. The option will be made by a
declaration at the time of filing Income-tax Return. [Sec. 115-I]
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Non-resident when becomes Resident in India:
If a non-resident Indian becomes resident in India in the subsequent years,
the special provisions of Chapter XII-A will continue to apply in relation to the
investment income derived from specified assets except shares in an Indian
company, until the transfer or conversion (other than by transfer) into money
of such assets. [Sec. 115H]
Return of Income
A non-resident Indian is not required to furnish his return of income, if -
(a) his total income for that previous year consists only of investment
income or income by way of long-term capital gains (from foreign exchange
assets) or both ;
(b) the tax has been deducted at source on such income; and
(c) the assessee opts to be assessed under the special provisions of Chapter
XII-A. [Sec. 115G]
Other Concessions available to Foreign Companies and Offshore Funds:
(a) Transfer of shares held in an Indian Company, in a scheme of
amalgamation of foreign companies :Capital gains arising from transfer of
any shares, held in an Indian company, by the amalgamating foreigncompany to the amalgamated company, shall not be chargeable to tax, if -
(b) Tax on income from units purchased in foreign currency or capital gains
arising from their transfer to an Offshore Fund : Section 115A provides for a
special rate of tax in case of any income from units purchased in foreign
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currency on long-term capital gains arising from their transfer, to an overseas
financial corporation (offshore fund).
Deduction of tax at Source on Long-term Capital Gain on Sale of Shares or
Debentures of other specified Assets by Non-resident Individuals of Indian
Nationality / Origin
Section 195 read with Section 204 of the Income-Tax Act requires authorised
dealers to deduct income tax at source at a flat rate of 20% on long-term
capital gains accruing to an NRI on the transfer of specified assets before
remitting to him the balance sale proceeds or crediting such proceeds to his
NR(E) / FCNR Account. For this purpose the production of No Objection or
Tax Clearance Certificate from the Indian Income Tax authorities has been
dispenses with and the authorised dealers have been issued the following
guidelines before remitting such sums.
(1) The seller of shares is an NRI as defined in Chapter XII_A of the Income-
tax Act.
(2) The shares/debentures / securities (i.e. the assets specified in Chapter
XII-A of the Income-tax Act) where acquired by or on behal of the non-resident investor with repatriation benefits, in accordance with the special or
general permission of Reserve Bank, out of remittance from abroad in foreign
exchange or from the foreign origin funds held in the investor's Non-resident
(External) / FCNR account, and such assets are sold with the Reserve Bank's
specific or general permission or, in case of shares acquired under Portfolio
Investment Scheme and sold through stock exchange,the sale / transfer of
sahres is effected in accordance with Notification No. F. 10 /21 / 86-NRI Cell,
dated 10th June,1986 issued by Government of India under Section19(6) of
the Foreign Exchange RegulationAct, 1973. Where the sale of shares
/debentures acquired by the on-resident investor directly from the
companies concerned is made on repatriation basis with the specificpermission of Reserve Bank and the Bank's approval letter is produced, it will
not be necessary for authorised dealers to verify that these assets were
acquired by the seller by remittance in foreign exchange or out of foreign
exchange funds.
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(3) The bonus shares will be treated as foreign excahnge assets if the
shares on the basis of which the bonus shares have been issued are "foreign
exchange assets"as defined in Chapter XII-A of Income-tax Act.
(4) If the rights shares are purchased or subscribed to in convertible "foreign
exchange assets" and,therefore, the long-term capital gains arising on the
sale of this right will not be covered under the provisions of Chapter XII-A of
the Income-tax Act.
(5) The non-resident investor has submitted a declaration by a letter to theauthorised dealer to the effect that the asset sold by him was his bona fide
long-term capital asset and not stock-in-trade.
(6) The specified capital asset sold by the non-resident Indian was held by
him for a period of more than 36 months from the date of acquisition. For
this purpose, the date of acquisition and sale may be determined in the
following manner:
(a) In case the shares / debentures / securities were acquired by the NRI
directly from the concernedcompany / Government, the date of acquisition
will be the date ofissue as indicated in the realtive certificate.
(b) In case the assets (shares / debentures / securities) were purchased by
the NRI through stoc exchange, the date of acquisition of the asset by the NRI
(i.e. the date from which the capital asset has been "held" by him) will be the
date when the asset together with the transfer document completed in all
respect is handed overto the NRI or his agent.
(c) The date of 'transfer' of the capital asset, being a foreign exchange asset
will be the date of which the asset together with transfer documents
complete in all respects is handed over to the buyer or his agent.
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Note :
The date of acquisition / transfer in case covered by item (b) or (c) above.,
will have to be verified by the authorised dealer by examining the relevant
facts. For this purpose, besides the declaration given by NRI seller / his agent
/ broker regarding the date of acquisition / transfer, the authorised dealer
may see whether the payment for the asset was made near about the
claimed date. If ther is a considerable time-lag between the claimed date of
acquistion / transfer and the date of payment, the case will require further
examination. Thus, if the date of acquisition is very much earlier than the
date of payment or the date of transfer is long ater the date when payment is
received, the authorised dealer will have to examine the matter further and
act accordingly.
A non-resident entitled to recieve any sum on which tax is required to be
deducted at source (as stated above), may make an application in Form 15C
(for banking companies) or Form 15D (for other non-residents), to the
Assessing Officer for the grant of a certificate authorising him to receive such
sum without deduction of tax at source. The Assessing Officer shall grant a
certificate in Form 15#. The person responsible for paying such sum to the
non-resident shall make such payment without deducting tax, so long as the
certificate is in force.
The authorised dealers are also required to send within 14 days of the date of
deduction of tax, a statement in form No. 27 to the Income-tax Officer having
jurisdiction to assess the authorised dealer concerned. A statement showing
the computation of capital gains in each case, should also be sent to the
Income-tax Officer ahving jurisdiction over the authorised dealer, along with
Form No. 27.
Failure to deduct tax at source attracts a penalty u / s 271C for a sum equal
to the amount of tax not so deducted. BEsides, interest shall be chargeableon the tax deductible, till the date it is actually paid u / s 201.
The above instructions will not be applicable in cases where the shares /
debentures / securities are sold by overseas corporate bedies owned directly
or indirectly by non-residents of Indian nationality / Origin (NRIs) to the extent
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of at least 60 per cent, as also where such assets sold by NRIs on repatriation
basis were held for a period upto 36 months [12 months in case of shares of a
company or listed securities or units of UTI or a notified mutual fund]. In
such cases the instructions contained in paragraph 3 of A.D. (M.A. Series)
Circular No. 27 of 1982 will apply.
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Computation of Long-Term Capital Gains realting to a Foreign Exchange Asset
in the case of Non-resident Indians (NRIs)
For computing the long-term Capital Gains following steps may be followed:-
Step I Check that the asset which has been transferred is a "foreign exchange
asset" as defined in Chapter XII-A of the Income-tax Act, 1961.
Step II Check that the asset transferred is a capital asset and not stock-in-
trade and a declaration to that effect is submitted by the NRI.
Step III Find out the date from which the foreign exchange asset has been
'held' by the NRI.
Step IV Check whether the asset has been 'held' for more than 36 months
[12 months in case of shares of a company or listed securities or units of UTI
or a notified mutual fund] before its transfer.
Step V After the above has been checked, the capital gains on the transfer
of foreign exchange asset is to be determined by substracting from the full
value of consideration received as a result of the transfer of the asset, the
following two amounts namely:
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(i) Expenditure incurred wholly and exclusively in connection with such
transfer, for example, commission paid to a broker (if accompanied by a
receipt),
(ii) Cost of acquisition of the foreign exchange asset and the cost of any
improvement thereto.
Note 1 : In this connection, it is clarified that interest, if any, on cpaital
borrowed for acquiring the asset will not form part of the cost of acquisition
or cost of improvement of the asset.
Note 2 : If the foreign exchange asset was on any previous occasion a
subject of negotiations for its transfer, any advance or other money received
and retained in respect of such negotiations shall be deducted from the cost
in computing the cost of acquisition of the foreign exchange assets.
The following examples will illustrate as to how the long-term capital gains
are to be worked out:
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COMPUTATION OF LONG-TERM CAPITAL GAINS
Since the shares were held for more than 12 months prior to their transfer,the capital gains arising on their transfer are long-term capital gains.
Further, as the shares were subscribed to in convertible foreign exchange,
these are foreign exchange, these are foreign exchange assets. Therefore,
long-term capital gains arising on their sale are governed by the provisions of
Chapter XII-A of teh Income-tax Act, 1961. The provision of section 48, as to
indexing the cost of acquisition shall not be applicable to such transfer.
Consequently tax @20% is to be deducted by the authorised dealers before
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8/3/2019 Capital Gain NRI
22/22
remitting such gains.
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