Capital Gain upto 1.5L tax free ? (same for NRI ?)

General
1

Hello,

Is Capital Gain upto 1.5L tax free ?
Are the rules same/different for NRI ?

2

There is no tax on long term capital gains (LTCG) upto 1 lac. (Holding period> 12 months)

You can read more on this topic here : Income Tax on Equity Share Trading - Learn by Quicko

I think it’s same for NRIs as well except for the fact that TDS is deducted for them if they book gains.

@Quicko do correct me if I missed something

1 Like
3

Yes, NRI gets the same exemption limit of 1 lack for LTCG. TDS is collected at 20%.
NRI do also get the basic exemption limit of 2.5 lacks,(if the nri has resident income such as rentals)however, if the NRI income is only by way of STCG and LTCG, then the benefit of basic exemption limit adjustment is not available.
Setoff and carryforward of losses is allowed against income of future years provided ITR is filed.

Disc: Not an expert.

1 Like
4

Thanks for the reply. Whats is the difference between 1L exemption limit and 2.5L exemption limit?
I only have STCG and LTCG, no other income in india.

5

I heard that ELSS investment reduces the taxable income upto 1.5 L.
Can this taxable income be from STCG & LTCG ?

6

1 lack is the exemption allowed for LTCG.

2.5 lack is the standard exemption as per Income tax slab. (if you opt for old tax regime)

Income tax slab and rates for individuals below 60 years

Up to Rs 2,50,000 Nil
Rs 2,50,001 to Rs 5,00,000 5% of (total income minus Rs 2,50,000)
Rs 5,00,001 to Rs 10,00,000 Rs 12,500 + 20% of (total income minus Rs 5,00,000)
Rs 10,00,001 and above Rs 1,12,500 + 30% of (total income minus Rs 10,00,000)

Income tax rates and slabs in new tax regime for FY 2021-22, FY 2022-23

Up to Rs 2,50,000 Nil
Rs 2,50,001 to Rs 5,00,000 5% of (total income minus Rs 2,50,000)
Rs 5,00,001 to Rs 7,50,000 Rs 12,500 + 10% of (total income minus Rs 5,00,000)
Rs 7,50,001 to Rs 10,00,000 Rs 37,500 + 15% of (total income minus Rs 7,50,000)
Rs 10,00,001 to Rs 12,50,000 Rs 75,000 + 20% of (total income minus Rs 10,00,000)
12,50,001 to 15,00,000 Rs 1,25,000 + 25% of (total income minus Rs 12,50,000)
Above 15,00,001 Rs 1,87,500 + 30% of (total income minus Rs 15,00,000)

2 Likes
7

Thank you very much.
Any idea about following ?

8

@neha1101
so If I go with old tax regeim and
if my STCG + LTCG is less than 2.5 Lakh in india then I don’t have to pay tax in India ?
(Tax on NRI income is paid in other country.)

1 Like
9

I am assuming you are an NRI, what happens is that TDS is deducted by the broker and paid when you sell shares. Effectively you have paid tax, however, you can get a refund if you file ITR.

Disc: I am not a tax expert, please do consult a tax expert. I could be wrong.

2 Likes
10

Hello @metallicsigma,

A basic exemption of 2.5 Lakhs is available to resident individuals against capital gains.

In the case of NRI, the basic exemption of INR 2.5 Lakhs is not available against income from capital gains. However, for Long term capital gain, the exemption of up to INR 1 Lakh is available to NRIs.

Also, deduction u/s. 80C (which covers ELSS investment) is not available against taxable capital gains.

Hope this helps!

3 Likes
11

@Quicko

Thank you very much for precise response.

Is there any way to reduce Capital gain tax for NRI ?

1 Like
12

Hi @metallicsigma

The taxation for NRI varies by situation. Here’s a read for your reference on Income Tax for NRI and Foreign Income - Learn by Quicko.

However, you can take advice from a tax expert based on your income situation. If any further queries, you can reach out to us at [email protected].

1 Like
13

Here again, I am assuming that you are referring to sale of shares and capital gain and not sale of property which results in capital gain.

For NRI there are no deductions available, and the ways you can reduce your capital gain is by ensuring that you sell stocks which fall under long term upto 1 lack rs which is the exemption limit available in a year. The second option is you could do tax harvesting, in case you have any stock which are under a loss. You could sell and incur a Capital loss and this will reduce the capital Gain. After you sell, after a day, you can buy back the same stock.

Do note that short term capital loss can be offset against long term capital gain and short term capital gain, but Long term capital loss can only be offset against Long term capital gain.

Disc: Not an expert, please do your own research on the above as I could be wrong. As Quicko has suggested, better to consult a tax expert

1 Like