India Tax on US Shares for RORs: Capital Gains Explained

If you’ve returned to India and are now classified as a Resident and Ordinarily Resident (ROR), selling those US-listed shares you acquired while abroad comes with specific tax rules under the Income Tax Act, 2025.

Even if you keep the sale money outside India, any capital gains you make are taxable here and must be calculated in Indian rupees.

How Your Capital Gains Are Calculated

First, you’ll need to figure out your capital gain in the foreign currency, like US dollars, by subtracting your original cost and any transfer expenses from the sale amount.

This foreign currency gain then gets converted into Indian rupees using a specific exchange rate.

• Subtract your cost of acquisition and transfer expenses from the sale proceeds in foreign currency.
• Convert this foreign currency gain to INR using the State Bank of India (SBI) Telegraphic Transfer (TT) buying rate from the last day of the month before your sale.
• Indian tax law does not offer special exemptions for gains or losses solely due to rupee depreciation.

If you held these foreign-listed shares for over 24 months, they are considered long-term capital assets, which means a different tax rate applies to your gains.

• Shares held for more than 24 months are long-term capital assets.
• Long-term capital gains are taxed at 12.5%, plus any applicable surcharge and cess.

Don’t Forget to Disclose Your Foreign Assets

As an Indian resident, you’re required to disclose your foreign income and overseas assets in your Income Tax Returns (ITR).

This includes any foreign shares you held and income from them, even if you acquired them while living in the US and retain the sale proceeds abroad.

• Report your foreign holdings and income in Schedule FA of your ITR for the tax year 2026–27, if you held foreign shares at any point during calendar year 2026.
• Disclose foreign income in Schedule FSI of your ITRs.
• You can retain sale proceeds outside India if the shares were originally acquired while you were a US resident.

Not complying with these disclosure requirements can lead to significant penalties, so it’s crucial to get this right.

• Non-compliance can result in a penalty of up to ₹10 lakh.

A New Compliance Window for You

Recognizing that some taxpayers, like former students or employees with foreign ESOPs, might have unintentionally missed these disclosures, the Central Board of Direct Taxes (CBDT) has introduced a one-time compliance window.

This allows eligible taxpayers to declare previously undisclosed foreign income and assets by paying the necessary taxes, interest, and fees.

• For non-disclosure of foreign movable assets with an aggregate value up to ₹20 lakh, no penalty will be imposed.
• Eligible taxpayers under this relaxation will also receive immunity from prosecution starting from October 1, 2026.

Understanding these rules is key to managing your finances effectively and avoiding penalties as you navigate your tax obligations in India.