How the budget has eased the rules for international transactions
Mint explains some of the amendments in the budget that are applicable to international transactions. Until now, investing in international stocks attracted a long-term capital gains (LTCG) tax rate of 20% with indexation benefit—adjusting for inflation—if the stocks were held for more than 24 months.
While the holding period remains the same, the LTCG rate has been lowered to 12.5%, at par with the rate for domestic equity shares. “Overall, the simplified tax regime is expected to benefit international stock investing by making it more attractive for Indian investors, as lower LTCG rates and the elimination of indexation simplify tax calculations," said Viram Shah, co-founder and chief executive officer, Vested Finance, a platform for international investments.
Also read |Understanding impact of Budget on personal finance “This is a positive step for international investing, as brings the LTCG rate of foreign stocks with that of domestic stocks," said Ashish Kashyap, chief executive officer and founder of INDMoney, a service for investing in US stocks. However, other certain costs still apply to investing in overseas stocks.
These include a foreign exchange fee of 1.5% one-way (and an additional 1.5% for converting back into Indian rupees) and a brokerage fee of up to 0.2% of the trade value. These forex and brokerage fees (zero in some cases) can vary depending on the brokerage firm and prevailing exchange rates.
Whether remitting money outside India for investing in stock markets or funding children’s overseas education, if the transaction value is more than ₹7 lakh, a 20% tax is collected at source (TCS). New rules announced in the budget allow employees to declare such TCS with their employer and get it adjusted in
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