I am a non-resident Indian (NRI) and started investing in raised companies in 2022 through my NRE account. I now want to enchant my portfolio, sell a few shares and reinvest the return in other listed company shares. Is there any exemption available for capital gain arising from stock sales? —Aname withholding on request equity shares of listed companies held for more than 12 months are considered long -term capital assets, and any consequent profits are considered long -term capital gains (LTCG). LTCG is generally taxed at 12.5% (plus appropriate surcharge and strike), subject to relief under the applicable agreement for dual tax avoidance (DTAA). The Income Tax Act, 1961, provides certain provisions for NRIs and persons of Indian origin (PIOs) under Chapter XII-A (sections 115c to 115i). In terms of these provisions, capital gains can be exempt from tax if the returns of the sale are reinvested, subject to the following conditions: • The taxpayer must be an NRI or Pio. • The asset transferred must fall within the category specified assets (shares of an Indian company are such a specified asset). • The shares must be obtained using Convertible Fallands (eg funds from a NRE account, FCNR account or foreign inner overpayment). • The net consideration (ie, considering the gross sales costs for the sale less) must be reinvested within six months of the date of transfer in specified assets (including stocks). Where these conditions are met, the capital gain from the sale of such shares is exempt to the extent that the net consideration is reinvested in specified assets. Where only a portion of the net consideration is reinvested, the release is allowed on a proportional basis. However, to retain this exemption, the reinvestment asset must be held for a minimum period of three years. If the reinvesting shares are sold or otherwise transferred before completing three years, the exemption used earlier will be withdrawn, and the capital gains so released will be payable for tax in the year of such transfer. In terms of these provisions, where your only income consists of long -term capital gain from the transfer of specified assets, and appropriate tax has been deducted and deposited from the source (TDS), the submission of a return of income in India is not mandatory. However, if TDS has already been deducted and your exemption claims on the basis of reinvestment, it is advisable to submit an income tax return to claim the corresponding refund. Harshal Bhuta is a partner at Pr Bhuta & Co. Cas
Is there exemption from capital gain on reinvesting the returns of selling shares?
