Income Tax: Overseas Equity Investment..!
by Ms. Sonu Iyer, EY India
Income earned from equity investment in listed Indian companies is
eligible for tax exemption. However, no such benefit is available from overseas
equity investments.
For individuals who qualify as “resident & ordinarily resident” as
per Indian income tax laws, the income tax treatment of income earned from
overseas equity investment would be as follows:
Dividend..!
Subject to tax at progressive rates ranging from 10% to 30% (education
cess of 3% and surcharge of 10% extra).
Surcharge is only levied in case total taxable income exceeds Rs.1 crore
subject to marginal relief.
Short-term capital gain ..!
Equity investments held for less
than 36 months (3 years) are subject to Short-term capital gain (STCG)
income tax at progressive rate of tax ranging from 10% to 30% (education cess
of 3% & surcharge of 10% extra).
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| Ms. Sonu Iyer, EY India |
Long-term capital gain..!
Equity investment held for more than 36 months (3 years) are subject to
Long-term capital gain (LTCG) income tax at a rate of 20% (education cess of 3%
and surcharge of 10% extra).
In case of double taxation of income in aboard & India, as per the
double tax avoidance agreement between these 2 countries, a tax credit of taxes
paid in Sri Lanka may be claimed in India.
Any long-term and short-term capital loss can be carried forward up to
eight (8) years from the year of sale in order to offset future LTCG or / STCG.
Details of investment are required to be reported in India.
Ms. Sonu Iyer, Partner, EY India
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