Tax on foreign assets

Taxation
1

Hi @Quicko ,

My employer assigned me some stock as part of RSU stock options plan. Few of them are now vested and I am allowed to sell.

My question is, what would be taxation if I sell within 1 year ? 2 years ? And in 3 years ? Where can I find more details about the taxation and the rules about if the sold asset is done under loss / profit ?

Thanks

2

if you sell it before 2 years, it will be taxed as STCG and you need to pay tax as per your tax slab. If sold > 2 years, it will be taxed as 20% with indexation benefit.

Note: Tax is applicable when the RSU’s will get vested and not when you sell it.

@Quicko can confirm

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3

Thanks for your reply Jack. Isn’t the case for even selling ? I hear it’s double taxed - one when the stock get vested and two when I am selling.

4

+1 to what @Jack_R said above.

To clarify…

Typically,

  • Income-tax (as per one’s tax slab) is applicable when the RSUs vest.

  • Subsequently, upon sale of the shares,
    capital-gains tax will be applicable is any gains between the price at which RSUs vested and the final sale-price.

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5

Yes, you need to pay the capital gain tax when you sell it.

6

Note: You do not need to pay the capital gain tax if you sell the shares immediately after it is vested (on the same day)

7

(Sorry to be pedantic :sweat_smile: )

Of course, we need to pay capital-gains tax even if the shares are sold on the day they vest.
That too STCG-tax, as the vested shares were held for < 2years.

However, the expectation is that the price movement between the vest-price and sale-price is minimal (same day) and hence the STCG (and STCG-tax) will be minimal as well.

Also, in case the share price falls below the vest-price,
and if one eventually sells the shares below the vest-price,
then one can declare/claim the capital-loss and use it to offset other capital-gain that one may have.

Note: Such a capital-loss cannot be used to offset the perquisite income-tax paid when the RSUs initially vest.

8

every were TAX - this is country or this country is created for only collecting TAX purpose

so only most of indian are surrender their passport and setling in DUBAI , etc

but i dont have such chance :cry: :cry: :cry:

I went to buy small car

car price is 9 lakhs but 3.5 lakhs is coming extra to pay tax and GST , so i skip to purchase car , i never want to give TAX to this bullshut GOVT , i happy to use UBER Now

i will never go to high restaurant , or malls , or hypermarket ,

i will buy all in small shop only

9

Thanks for all your replies and with detailed answers.

Let’s say share price vested at 200 usd and I sell it during the downturn of the stock at 150. Do I still need to pay the taxes?

Thanks

10

Precisely the behaviour that the policy is trying to incetivize.

Well done.
You are good at “playing the game” :slight_smile: :+1:t4:

11

You mean the following scenario, right?

No capital gains. So, capital-gains tax.

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12

Thank you very much for your response. I have missed reading .

Does this mean I can only offset for capital gains tax ? Meaning I can’t use this to offset overall tax. Can I?

Another question, can I offset losses in the US market against the gains in the Indian market?

Thanks

13

Yes.

Yes.

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14

@cvs if I have long term capital loss in US market, can I carry forward it, without offsetting it with gains indian stocks? Because, if I offset, I’m only saving 10% tax on gains on indian shares, but if I carry forward, next year I can probably offset the loss with LTCG on US shares, there by saving 20% tax, right? In that case, offsetting with indian gains doesn’t make sense, what am I missing here? Or is there no provision in ITR portal to treat gains on US/indian stocks seperately?

15

I am not sure whether it is permitted to carry-forward capital-losses without offsetting them against capital-gains.

Next year it is likely that the LTCG-tax will be ~12.5%.
(per the recent proposed budget update).

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16

Hi @kiranvaddireddy,

The losses will be adjusted against the gains. This is not a choice.

Moreover, as mentioned by @cvs, for the assets sold after 23rd July 2024, LTCG tax will be applicable at flat 12.5%.

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