International taxation
Money sent abroad to invest, and what it becomes: what has to be established, reported and reconciled in India, and where we come in.
How people usually arrive.
You buy shares through an overseas broker and are not sure what has to be reported in India.
Tax was collected when you sent money abroad and you want to know how it is set against what you owe.
You have paid tax abroad on a dividend or a sale and want to know whether it counts here.
Where we come in.
What you can engage us to help with here, how it usually begins, and what is useful to have.
- Sending money out
- We establish what applies to the transfers you are actually making under the remittance route, whether tax will be collected on them, and how what is collected is set against what you end up owing.
- Reporting what you hold
- If you are resident for the year, overseas shares, funds, accounts and employer equity are reported in the Indian return whether or not anything was sold. We work out what is reportable, in what detail, and prepare the schedule so that it agrees with the broker’s statements.
- Gains, dividends and currency
- We bring overseas gains and income into rupees on the defined basis, work out each gain from the cost and the holding period, and reconcile dividends against the tax taken abroad.
- Relief for tax paid abroad
- Where tax has already been taken abroad, we establish what relief the treaty position allows, prepare the claim, and tell you which foreign documents it depends on and by when they must exist.
- The return
- We prepare and file the return so that the holdings, the income, the foreign tax and the relief agree with each other.
It begins with the overseas broker statements, the remittance advices and any certificate for tax collected on the transfer.
Useful to have, if you have it
- Overseas broker statements, including the account opening date
- Remittance advices and any certificate for tax collected on the transfer
- Foreign dividend statements and evidence of tax withheld abroad
- If the shares came from an employer, the plan paperwork
Where this needs another specialist
We advise from India on the Indian position. Where a filing is needed in another country, we work with or refer you to a practitioner licensed there. We do not recommend what to buy or sell, here or abroad.
What becomes relevant, and when.
Each consideration at the stage it tends to arrive, explained once. The ones shared with other matters say so.
Before you act
- Residency
Residential status decides whether overseas income and assets come into the Indian return at all. It is settled before the rest is worked out.
Shared with five other matters. See them on the map →
- What the route allows
At transfer
- Remittance (LRS)
Money sent abroad to invest goes through a remittance route with limits, declarations and reporting of its own. It is the first record of the investment.
- Tax collected on transfer
Tax is often collected on the transfer itself, at the bank, before the money leaves. Whether it is, and how much, depends on the purpose and on how much has been sent in the year. It appears in your tax credit statement and is reconciled in the return.
While you hold
- Foreign asset reporting
If you are resident for the year, overseas shares, accounts and other assets are reported in the Indian return for each year they are held, whether or not anything has been sold.
Shared with 02 Tax returns · 07 ESOPs & employee equity · 08 Living abroad / NRI · On the map →
- Dividends and interest
- Currency conversion
Overseas gains and income are brought into rupees on a defined basis, not a convenient one. Which rate, and on which date, is part of the working.
At sale
- Capital gains
Selling an overseas holding raises a capital gains question in India, worked out in rupees from the cost and the holding period. How it is treated depends on the kind of asset.
Shared with seven other matters. See them on the map →
Relevant here too. Explained under While you hold.
- Relief for tax paid abroad
Where tax has already been taken abroad, on a dividend or on a sale, relief may be available in India. It depends on documents from the foreign side existing in time, and on the treaty position.
- Treaty position
The treaty between India and the country where the income arises decides how withholding there and relief here fit together.
Shared with 07 ESOPs & employee equity · 08 Living abroad / NRI · On the map →
At filing
- Income-tax return
The holdings, the income, the foreign tax and the relief are all reported in the return. The schedules have to agree with each other.
Shared with nine other matters. See them on the map →