I am an NRI and would like to start investing in stocks (long-term) through an NRO account. How would I go about filing the tax returns on theses earnings ?

Sunil

I understand that you wish to invest in India in listed equity shares on recognised stock exchanges. Further, I understand that you qualify to be a non-resident in India as per the provisions of the I-T Act, and shall be investing through your NRO account in India in INR. Earnings from listed shares in India can either be capital gains (including loss) on sale/transfer of shares or dividend incomes.

Sale of listed equity shares held for more than 12 months can result in long-term capital gains (LTCG)/loss (LTCL). Such LTCG (where STT (Securities Transaction Tax) is paid) are taxable as per provisions of section 112A @ 10 per cent (LTCG to be calculated without considering indexation for cost inflation). Shares held for up to 12 months resulting in short-term capital gains (STCG)/loss (STCL) are taxable at the tax slab rates applicable to you. Any such gains/loss shall be taxable as per the appropriate provisions and shall be required to be reported in the appropriate tax return form applicable to you. Additionally, investment in shares shall be required to be reported in the Asset-Liability schedule of the tax return form (as may be applicable). In case of any dividend incomes, such incomes shall be taxable as Income from Other Sources at the applicable rates of the Double Taxation Avoidance Agreement (DTAA) between India and your country of residence.

The writer is a practising chartered accountant. Send your queries to taxtalk@thehindu.co.in

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