Capital Gains Tax on Sale of Foreign Shares by a Resident Individual in India
Foreign shares (say, shares of Apple, Google, or any company listed or held outside India) are treated in Indian tax law the same way as unlisted Indian shares — not like shares traded on Indian stock exchanges. That single point drives everything else. They do not get the lower, special rates that apply to Indian listed shares.
Here’s the overall picture for a person who is a resident (and ordinarily resident) in India, since such a person is taxed in India on worldwide income.
Summary
| Item | How it works |
|---|---|
| Who is taxed | A resident and ordinarily resident individual pays Indian tax on the gain, wherever the shares are held or sold |
| Type of asset | Treated like unlisted shares / “other” capital assets — not eligible for the special listed-share rates |
| Holding period cut-off | More than 24 months = long-term; 24 months or less = short-term |
| Long-term gain (held > 24 months) | Taxed at 12.5% (plus surcharge and 4% cess), without any inflation/indexation benefit — for sales made on or after 23 July 2024 |
| Short-term gain (held ≤ 24 months) | Added to total income and taxed at the person’s normal slab rate |
| Currency | Cost and sale price are converted into rupees; the gain is worked out in rupees |
| Double tax | Usually taxed only in India under most tax treaties; foreign tax credit available if the other country also taxes it |
| Reporting | Foreign shares must be disclosed each year, and the gain reported in the return, even if there is no profit |
A few points worth stressing
The rate changed recently. Up to 22 July 2024, long-term gains on foreign shares were taxed at 20% with an indexation (inflation) adjustment. From 23 July 2024 onward, that became a flat 12.5% with no indexation. A lot of older online articles still quote the 20%-with-indexation figure, so it’s easy to be caught out.
Short-term gains are the expensive ones. Because foreign shares don’t get any special short-term rate, selling within 24 months means the profit is simply stacked on top of your other income and taxed at your slab rate, which can be as high as 30% plus surcharge and cess.
“Only taxed in India” for most markets. Under the tax treaties with countries like the US, capital gains on shares are generally taxed only in the country of residence — so an Indian resident selling US stocks normally pays only in India, not in the US. Dividends are treated differently (tax is usually withheld abroad and a credit is claimed in India), but that’s a separate topic from capital gains.
Disclosure is not optional. Foreign shares have to be reported in the foreign-asset schedule of the tax return every year you hold them, based on the calendar year, even if you made no gain or even a loss. Missing this carries heavy penalties under the black money law, separate from the tax on the gain itself.
Losses. A loss on foreign shares can be set off against other capital gains and, if unused, carried forward for up to eight years — long-term loss only against long-term gains, short-term loss against either.
One caveat: exact liability depends on the sale date, the person’s residential status (resident vs. non-resident vs. not-ordinarily-resident changes things a lot), and whether a treaty applies, so the figures above are the general resident-and-ordinarily-resident position rather than a substitute for running the actual numbers.
