Capital Gain In The Case Of Transfer of Shares/ Debentures by Non-Residents

 

In the case of long term capital gain, the cost of acquisition and cost of improvement thereto are both indexed. However in the case of an assessee who is a non- resident any capital gain whether it is short term or long term arising from the transfer of a capital asset being shares, debentures of an indian company bought in foreign currency shall be computed in the following manner and no indexation of cost will be done even if it is a long term capital gain:-

§ Cost of acquisition shall be converted into the foreign currency which was initially utilized in the purchase of such shares or debentures. For the purpose of such conversion, average rate or TT buying and TT selling, on the date of transfer of such shares or debentures shall be taken.

§ Expenses of Transfer will also be converted into the same foreign currency, which was initially utilized for acquisition of such shares or debentures. For the purpose of conversion average rate of TT buying and TT selling on the date of transfer.

§ Full value of consideration shall also be converted into the same foreign currency which was initially utilized for the purchase of such shares or debentures. Here also the average rate of TT buying and TT selling of the foreign currency on the date of sale shall be taken.

 

§ Capital will be now be computed as under:-

Full value of consideration                                                                                                           ----

(Currency at average TT buying and TT selling rate on date of sale)

Less:-

i. Expenses on transfer (converted into foreign currency at average TT      (---)

Buying and TT selling rate on the date of sale)

ii. Cost of acquisition (converted into foreign currency at average TT            (---)

Buying and TT selling rate on the date of acquisition)                                      

Capital Gain in foreign currency                                                                                                 ----

§ The capital gain in foreign currency which may be long term or short term shall be converted into indian rupees at the TT buying rate only on the date of transfer of the capital asset.

 

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