India's ₹1.25 Lakh LTCG Exemption Doesn't Cover US Stocks — SkimNews
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- Section 112A grants a ₹1.25 lakh annual LTCG exemption only to qualifying Indian equity investments, explicitly excluding US-listed stocks such as Apple, Nvidia, and Tesla, according to tax expert Gaurav Makhijani, Managing Partner at Makhija Gera & Associates LLP.
- Foreign-listed shares must be held for more than 24 months to qualify as long-term capital gains, compared with the 12-month threshold for Indian-listed stocks.
- Foreign shares held for 24 months or less are taxed at the investor's applicable income-tax slab rate, while longer-held gains face a 12.5% LTCG rate without indexation.
- Nirmala Sitharaman indicated the government will hear investors' views on LTCG tax during upcoming Budget consultations, though her comments do not amount to an announcement that the government intends to scrap the tax.
- Pankaj Chaudhary, Minister of State for Finance, said in a July 20 parliamentary written response that there is no proposal under consideration to abolish LTCG tax for domestic or retail investors.
- Taxable capital gains on overseas shares are calculated by subtracting the cost of acquisition and eligible transfer-related expenses from sale proceeds, with prescribed foreign-exchange conversion rules applied to determine the gains in Indian rupees.
Why it matters: Indian investors in US stocks held under 24 months face full slab-rate taxation with no ₹1.25 lakh relief, and even longer-held positions are taxed at 12.5% without indexation—making overseas equity gains materially more burdensome than equivalent domestic profits under Section 112A.
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